Big Printin’ – United Parcel Service (UPS)

by Dan February 22, 2017 3:24 pm • Big Printin'

Back in late January, prior to United Parcel Service’s (UPS) Q4 results we detailed a bearish trade idea when the stock was in the high one hundred and teens (UPS – Package Waiting). The stock is down about 10% since, and has been unable to find its footing, with today’s decline placing the stock about 1% from its 2017 lows and below technical support dating back to late July at $106:

UPS 1yr chart from Bloomberg

One trader today (apparently) looks like they were forced to roll out their bullish view on the stock. When UPS was trading $105.38 a trader sold to close 8200 April 110 calls at 1.10 (or $902,000 in premium) and bought to open 4100 June 110 calls for $1.95 (or about $800,000 in premium). This new call position is interesting as the roll was done for near premium neutral so it’s not adding good money after bad. The new position has the same strike, a break-even at $111.95, and offers 2 more months to play out. Yet it’s less contracts now, so the payout potential is much less.

The next identifiable catalyst will be Q1 earnings which should fall in the last week of April, another reason why these calls were rolled out because they now catch that event.