Traders Look For Lower Move on Raytheon's Earnings

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.

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.


Raytheon Competes With:


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David Russell is a reporter and writer for OptionMonster.