CASY – Casey’s General Stores, Inc. – Shares of the operator of convenience stores located in nine Midwestern states slipped slightly by 0.25% in the first half of the trading session to stand at $35.75 by 12:00 pm (ET). Casey’s General Stores’ shares are perhaps lower today after the firm reiterated its recommendation that shareholders not tender their shares into Alimentation Couche-Tard Inc.’s $36.00 per share extended offer. One options investor expecting Casey’s shares to continue to decline ahead of August expiration purchased a plain-vanilla debit put spread on the stock. The trader picked up 3,419 puts at the November $35 strike for a premium of $1.90 each, and sold the same number of puts at the lower November $30 strike for a premium of $0.60 apiece. Net premium paid to purchase the spread amounts to $1.30 per contract. Thus, the bearish strategist is prepared to make money as long as CASY’s shares fall 5.7% from the current price of $35.75 to breach the effective breakeven point on the spread at $33.70. The investor walks away with maximum potential profits of $3.70 per contract should shares of the underlying stock plunge 16.1% from the current price to trade below $30.00 by August expiration day. The overall reading of options implied volatility on the stock dropped 10.1% during the session to stand at 19.43% as of 12:10 pm (ET).
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.
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