SKS – Saks, Inc. – Frenzied put buying activity on the operator of high-end luxury retail department stores suggests some options traders are bracing for bearish movement in the price of the underlying stock to continue through September expiration. Saks’ shares declined as much as 5.40% in afternoon trading to touch an intraday low of $7.17. The retailer’s shares are currently down 4.6% to stand at $7.23 as of 12:50 pm ET. Pessimistic players positioning for additional share price erosion picked up at least 4,500 puts at the September $7.0 strike for an average premium of $0.30 per contract. Put buyers make money if SKS shares fall another 7.33% from the current price of $7.23 to breach the average breakeven point to the downside at $6.70 by expiration day next month. Saks’ shares last traded below $6.70 on February 16, 2010. Increased investor demand for put options on Saks contributed to the 9% increase in the stock’s overall reading of options implied volatility to 54.04% this afternoon.
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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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