On July 20th, the day after Hasbro (HAS) reported Q2 earnings that beat on strength of sales of Jurassic World movie toys, the stock closed up 50% on the year, closing at a new all time high:
Investors in HAS had lots to cheer about at the time, as the Jurassic Park re-boot blew out opening weekend records, and as the official toy partner for the impending Disney release of their Star Wars reboot this past weekend, the company would be selling toys in 2015 for two movies that could gross close to $4 billion in ticket sales worldwide!
But oddly, since July 20th, shares of HAS have declined 21%, with the stock making a series of lower highs and lower lows, having just broken through important near term technical support at $70 and for now bouncing off support at $65:
Those two levels are interesting as today a trader rolled down and out a bearish view (or at least defensive) in shares of HAS, focusing on $70 and $65.
When the stock was $65.75 a trader sold to close 17,000 of the Jan 70 puts at $4.85 and bought to open 17,000 Feb 65 puts for $3.50 for a debit of $1.35. The net premium outlay is $2.3 million. These Feb 65 puts break-even at $61.70, down 6% from trading levels.
As always we will offer our usual caveat on unusual activity, without knowing the trader’s intent it is nearly impossible to glean anything meaningful from the activity. While this could be an outright bearish bet, I suspect it is more likely an investors rolling down protection as the stock has moved lower. A quick look at options volume monitoring service Trade Alert shows that the Jan 70 puts were bought on Dec 4th for 3.25 to open, also part of a roll down from a higher strike, where the trader sold to close 11,000 of the Jan 75 puts when the stock was $69.70.
The price of options reflect this continual put buying, with 30 day at the money implied volatility having near just matched 52 week highs above 35%:[caption id="attachment_59482" align="aligncenter" width="600"] HAS 1yr chart of 30 day at the money implied vol from Bloomberg[/caption]
The new identifiable catalyst for HAS will be Q4 results scheduled for February 8th and commentary around Star Wars sales will obviously be the focus. Talk about buying the rumor and selling the news.