Packaging and container manufacturer Ball Corporation (BALL) is up 12% over the past year, returning about half as much as the overall market. One trader sees shares trading lower over the coming weeks.
That’s based on the August $65 puts. With 55 days until expiration, 6,754 contracts traded compared to a prior open interest of 151, for a 45-fold rise in volume on the trade. The buyer of the puts paid $3.83 to make the bearish bet.
Ball shares recently traded for about $62.50, meaning the $65 puts are already about $2.00 in-the-money.
Shares have recently started declining, and are well off their 52-week high of $71.32 set back in May.
Ball has had a mixed year operationally, as earnings surged nearly 2,000% despite a 4% decline in revenues.
While consumer spending has been weak and may weigh on packaging, Ball sports a 30% profit margin, which is huge for a manufacturer.
Action to take: Investors may like shares in the coming weeks, as soon as the current downtrend ends. Ball shares currently pay a 1.3% yield, which could potentially increase over time.
For traders, the August $65 puts play well to the current downtrend for shares. Traders may be able to earn mid-double-digit returns, but should look for signs of a stock bottom to take profits on the 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 company mentioned in this article.