Apparel manufacturer V.F. Corporation (VFC) is down 41% over the past year, and the trend points to further losses. One trader is betting the stock will continue to sink over the next 11 months.
That’s based on the March 2025 $10 puts. With 339 days until expiration, 42,594 contracts traded compared to a prior open interest of 191, for a massive 223-fold rise in volume on the trade. The buyer of the puts paid $1.34 to make the bearish bet.
V.F. Corp shares recently traded for just over $12, so the stock would need to see a further 20% drop in the next months for the option to move in-the-money.
Last week’s drop in shares took the stock to a new 52-week low.
Rising costs and a sizeable debt load are weighing on the company’s operations. Revenues slid 16% last year. VFC managed to make a small profits, giving shares a valuation of 110 times earnings, but 11 times forward earnings.
Action to take: With shares in a strong downtrend and hitting a new 52-week low, interested investors should hold off until the trend ends, which may also mean waiting for a turnaround in VFC’s profitability.
VFC does currently pay a 2.7% dividend at today’s prices, but has already cut its payout by two-thirds and may have to eliminate the payout entirely.
For traders, the March 2025 $10 puts have plenty of time to play out, and could see high double-digit returns on a further drop. More aggressive traders may want to find a put option with less time to play out.
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 company mentioned in this article.