Jefferies shares touched a 52-week low today, and if put activity is any indication, options traders see them going even lower.
As of noon today, over 10,000 of the November 10-strike puts traded hands at an average price of $0.40, a trade that won't be profitable unless Jefferies closes below $9.60 by November expiration - which happens to be tomorrow.
More striking is the recent overall surge in open put contracts. Ten days ago, Jefferies' total open put interest was just under 25,000 contracts. Today, there are over 250,000 open put contracts, a ten-fold increase.
Those 250,000 contracts represent 25 million shares, or nearly 20% of Jefferies' 123 million share float.
To put those figures in greater context, Legg Mason has a similar float at around 135 million shares. Yet there are only 37,000 open put contacts, meaning there are open put contracts on just 3% of the float.
Said Cantor Fitzgerald's Mike Khouw: "That's a lot of bearish activity."
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