Shares of media conglomerate Paramount Global (PARA) have struggled in the past year, with a 37 percent drop in shares. One trader sees a further decline ahead.
That’s based on the February 2023 $20 put. With 65 days until expiration, 12,703 contracts traded compared to a prior open interest of 274, for a 36-fold rise in volume on the trade. The buyer of the puts paid $2.05 to make the bearish bet.
The stock recently traded just under $20, making this an at-the-money trade. The stock has a 52-week low closer to $15, so a further drop lower in the coming weeks is possible.
The media giant has struggled this year, with earnings down 57 percent, even with a 5 percent rise in revenues. Even with that drop, shares trade at about 4 times earnings.
Action to take: Investors may like shares for the long haul, as the company will likely have an earnings turnaround in time. And shares yield about 5.1 percent at current levels, a sizeable dividend payment more than covered by earnings.
For traders, there may be some short-term downside, as the stock seems to be having trouble breaking over $20 in the short-term. That could lead to the February puts to return mid-double-digits in the weeks ahead, especially on any drop in shares.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.