Raytheon is scheduled to report earnings this morning, and traders are positioning for a move lower.
Put volume surged in the defense contractor yesterday, as some 28,720 changed hands—17 times the average number. The downside options outnumbered calls by almost 4 to 1 in the session, according to OptionMonster's tracking systems.
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The November 45 strike was the busiest, trading 11,410 times against open interest of 2,577 contracts. Buying dominated the activity, with most of the large transactions pricing for $0.90 to $0.97. Some traders paid as much as $1.36.
Raytheon slipped 0.79 percent to $45.18 yesterday and is little-changed over the last three months, lagging a 13 percent gain in the S&P 500. On July 23, the company reported better-than-expected second-quarter results and management raised the full-year outlook.
The stock must fall about 3 percent by expiration for November 45 puts to turn a profit.
The second most active option on Raytheon was the January 41 put, which saw large institutional purchases $0.65 to $0.80. Other investors purchased the December 45 puts for $1.30 to $1.47.
The January strikes traded 6,168 times, about 20 times open interest, while volume on the December puts was more than 1,000 times open interest at 5,369 contracts.
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David Russell is a reporter and writer for OptionMonster.