LPX – Louisiana-Pacific Corp. – Bearish players dominated trading in Louisiana-Pacific options today after the manufacturer of building materials posted lower-than-expected second-quarter profits ahead of the opening bell this morning. LPX shares fell as much as 9.9% to touch down at an intraday low of $7.28 as the firm’s reported net income of $0.17 a share failed to meet average analyst expectations of $0.19 a share. A number of investors appear to have thrown in the towel on Louisiana-Pacific by shedding near-term call options. Traders sold approximately 2,500 calls at the August $7.5 strike for an average premium of $0.35 each. Call activity was heaviest at the August $9.0 strike where it looks like investors shed roughly 26,000 calls at an average premium of $0.07 a-pop. Investors could be selling-to-close previously established long bullish positions on LPX, which may have been initiated ahead of this morning’s earnings release. Alternatively, traders could be selling the calls outright in the expectation they will keep the $0.07 average premium per contract should the August $9.0 strike calls fail to land in-the-money at expiration. The overall reading of options implied volatility on the building materials maker fell 24.9% post-earnings to 63.29% as of 12:10 pm ET.
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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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