Apparel manufacturing firm V.F. Corporation (VFC) is down nearly 50 percent over the past year. One trader sees the weakness in shares continuing throughout the next year.
That’s based on the January 2025 $10 puts. With 441 days until expiration, 40,812 contracts traded compared to a prior open interest of 258, for a massive 158-fold rise in volume on the trade. The buyer of the puts paid $1.35 to make the bearish bet.
VFC shares recently traded for about $13, so the stock would need to drop $3, or about 23 percent, for the option to move in-the-money. Shares just broke through to a new 52-week low.
Operationally, the company is struggling a bit. Revenues are down about 2 percent over the past year, but VFC has booked some losses. They also withdrew guidance and cut the dividend.
Shares look inexpensive at 7 times forward earnings estimates, but the company does have a high amount of debt.
Action to take: With shares in a downtrend, interested investors should hold off for now until shares can build a base and start moving higher off of that.
For traders, the price action is still to the downside. The January 2025 puts have plenty of time to play out, so investors can likely see some gains on this option in the months ahead.
If shares start to stabilize and move higher, it’ll be time to take profits on the long-term option trade.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.