×

AutoNation Shares: What Options Say Now

AutoNation dipped down as much as 14 percent Friday, and one trader is using the options to take a further bearish position.

Shares of the national car dealer were above $14 yesterday but are currently down 12.77 percent on the day to $11.95 after UBS downgraded them this morning from "neutral" to "sell." AN stock has been in a steady uptrend since hitting a low of $3.97 last fall, but that $14 level has been resistance since last June.

  • Who Owns AutoNation Now?

The options trade was all the way out in October, where 10,000 of the October 15 calls were sold for $1.70 and 10,000 of the October 10 puts were purchased for $1.80, according to OptionMonster's tracking systems.

The net debit is just $0.10, which is the risk if the stock finishes between $10 and $15. Above $15 the position has unlimited risk and below $10 it can make highly leveraged gains.

This is clearly a bet that AN cannot hold this level and will be at least another 20 percent lower from here over the next seven months.

_______________________________

Chris McKhann is an analyst and writer for OptionMonster.

_______________________________

Disclaimer