VPRT – VistaPrint NV – Shares of the provider of business cards, brochures and other products and services took a severe hammering during the trading session, falling as much as 38.3% to touch down at an intraday- and new 52-week low of $31.00, following a disappointing earnings announcement on Wednesday evening. VistaPrint’s fourth-quarter net income of $0.38 a share narrowly beat Street estimates, but the company’s forecast for first-quarter earnings and for fiscal 2011 came in well below that which analysts were expecting. VPRT estimates it will earn $2.09 to $2.24 per share in 2011 on revenue of $750 million to $780 million, while analysts were looking for an average of $2.36 per share in net income on revenue of $802.6 million. The significant decline in the price of the underlying shares and disappointing guidance from VPRT inspired bearish options activity on the stock as well as a plethora of downgrades by various analysts. Investors expecting VistaPrint’s shares to continue lower ahead of August expiration scooped up approximately 2,000 puts at the August $30 strike for an average premium of $0.87 per contract. Put buyers at this strike make money if, by expiration, shares fall another 6.00% from today’s low of $31.00 to breach the average breakeven point on the puts at $29.13. Options players also picked up 1,300 now in-the-money puts at the August $32.5 strike for an average premium of $1.83 a-pop. In-the-money put buyers are poised to profit should shares edge 1.05% lower to trade beneath the average breakeven price of $30.67 by expiration day. Finally, investors betting VistaPrint’s shares are not likely to rebound ahead of August expiration shed 1,200 calls at the August $35 strike to take in an average premium of $1.10 per contract. Call sellers keep the full premium received as long as VPRT shares trade below $35.00 through expiration day next month. In total, options traders exchanged more than 25,300 contracts on the stock by 2:10 pm ET, which is more than twice the number of contracts comprising previously existing open interest on VPRT of 10,554 lots. Options implied volatility is up 8.6% to 48.86% in afternoon trading.
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Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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