Bearish Smoke Signals Curling Around FDO

FDO – Family Dollar Stores, Inc. – Bearish smoke signals curling around the operator of general merchandise retail discount stores suggest some options investors are bracing for the price of the underlying shares to decline by October expiration. Family Dollar Stores’ shares slipped 0.45% lower to $42.83 by 11:35 am ET. Nearly all of the activity initiated in FDO options today involved October $42 strike puts. More than 12,800 puts changed hands at the October $42 strike versus paltry previous open interest of 806 contracts. It looks like the majority of the puts were purchased at an average premium of $1.20 apiece. Put buying players are prepared to make money should FDO’s shares fall another 4.7% from the current price of $42.83 to breach the average breakeven point to the downside at $40.80 by expiration day next month. Increased demand for bearish put options coupled with erosion in FDO shares helped lift the stock’s overall reading of options implied volatility 7.7% to 33.19% by 11:40 am ET.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

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.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.


*