Avon Products, Inc. (AVP) is a manufacturer and marketer of beauty and related products. The Company’s product categories are Beauty and Fashion & Home. Beauty consists of color, fragrance, skincare and personal care. AVP is currently trading around $12.62 in a 52 week range of $12.65 – 22.86. The company’s stock has been underperforming the market this year with shares decreasing 26.48% year to date. Today, a trader bought 6880 AVP Nov14 12.0 Puts for $0.45. This order involves this trader laying out over $300,000 in total premium. AVP is trading at its 52 week low, and this position more than likely indicates that this trader believes the stock is headed even lower. As the common adage goes, ‘The trend is your friend’, and the stock is trading below the Cloud, meaning this trader is banking on more downside for AVP.
Unusual Option Activity:
We define unusual option activity as large block trades that represent a large percentage of daily option volume. The block trade is considered “unusual” if the option volume is above the average daily volume over the past 22 days. At KeeneOnTheMarket.com we scan and analyze order flow from all of the major options exchanges in order to identify any unusual option activity.
Analyzing unusual order flow gives traders a window into what the positions that large institutional players have. The majority of unusual option activity can be traced back to hedge funds, mutual funds, and other large institutions. Knowing where these institutions are placing their bets can be hugely advantageous for any trader. These institutions have informational and technological advantages that the average trader doesn’t have, and the amount of time and analysis that goes into every one of their trades is substantial. We offer this service through our 7 hour daily LIVE trading room http://bit.ly/1usQnKR or through the only Unique Unusual Options Activity Scanner: http://bit.ly/1sCSaws
Order flow can however at times be deceiving. One might logically thing that a large block buyer of calls is bullish on the underlying. This is not always the case. Remember that a large number of participants in the equity options market are hedgers. Long calls are a hedge against short stock, and long puts are a hedge against long stock. With this in mind we have developed a 7 step trading plan that helps filter out unusual option activity that will not provide actionable trade setups. It is by using this plan that we are able to identify the most significant unusual options activity trades every day.
The Trade:
Buying the 6880 AVP Nov14 12.0 Puts for $0.45
Risk: $45 for every 1 lot
Greeks of this Trade:
Delta: Short
Gamma: Long
Theta: Short
Vega: Long
6880 AVP Nov14 12.0 Puts $0.45
Facebook
Twitter