Options Brief: Crocs, Inc. (CROX)

CROX – Crocs, Inc. – Shares of the designer and manufacturer of footwear for persons of all ages increased as much as 11.3% at the start of the trading session to touch an intraday- and new 52-week high of $14.00. The producer of plastic clogs forecast third-quarter net income of $0.22 a share, which exceeds average analyst estimates of $0.15 a share, helping shares of the underlying stock higher. Crocs’ shares have come off the boil a bit, however, and are currently up 5.00% on the day at $13.21 as of 11:20 am ET. The firm posted second-quarter earnings of $0.37 a share after the closing bell yesterday, which was substantially higher than the average consensus view for its earnings of $0.22 a share. Some options traders initiated near-term bullish bets on the shoe maker by buying calls and selling puts in the August contract. It looks like investors sold approximately 1,000 put options at the August $12 strike for an average premium of $0.14 each. These puts may have originally been purchased to hedge an earnings disappointment. Bulls hoping shares will continue to appreciate picked up about 1,000 now in-the-money calls at the August $13 strike for an average premium of $0.72 a-pop. Call buyers make money if CROX shares trade above the average breakeven price of $13.72 through August expiration. Finally, it looks like other investors expect Crocs’ shares to go no higher than $14.00 by expiration day. Roughly 1,500 calls were sold at the August $14 strike for an average premium of $0.25 apiece. Traders could be closing out previously established long call positions, or may be selling into the rally to pocket inflated premium on out-of-the-money calls. If the latter is true, call sellers keep the full $0.25 premium per contract as long as the price of the underlying stock fails to rally above $14.00 at expiration. Post-earnings the overall reading of options implied volatility on CROX plunged 28.1% to 52.26% as of 11:30 am ET.