Limited (LTD, news, chart) is seeing active trading ahead of earnings. The stock is down 18 cents to $17.95 and options volume is running 8 times the usual. More than 10,000 puts have traded, compared to 1,300 calls. Some traders appear to be taking out some downside insurance ahead of the results. The September 17.5 and 15 puts are the most actives. Today’s top trade is an order for 2,857 of the the 17.5s traded above the offer, or for 80 cents a contract. The block was perhaps part of some bear put spread trading, as two orders for 1,428 September 15 puts traded for 15 and 20 cents at the same time. Meanwhile, implied volatility is higher. In the September contracts, implied vols are 53 percent, compared to 48 percent for the Octobers. The skew hints at a possible earnings gap move of 7.5 percent, or $1.40 a share, when the retailer releases results after the closing bell.
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.