Asset manager The Caryle Group (CG) is down over 30% in the past year, with most of that drop occurring in the past few months. One trader sees further downside in the coming weeks.
That’s based on the June $32.50 puts. 62,057 contracts traded compared to a prior open interest of 190, for a massive 327-fold rise in volume on the trade. The options have 58 days until expiration, and the buyer paid $2.15 to make the bearish bet.
Caryle Group shares recently traded for about $35, so shares would need to drop by another $2.50, or 7.2%, for the option to move in-the-money. The strike price is also right near CG’s 52-week low of $33.02.
Asset managers are selling off with the overall market right now, but Caryle Group is a value play, trading at about 8 times forward earnings, and coming off a strong year with a 13% increase in revenue growth.
Action to take: While shares are now in value territory, there’s no signs the selloff is over quite yet. Carlye shares have a five-year support zone in the low $30 range, so investors may want to consider buying near there.
At current prices, The Carlyle Group also pays a 3.9% dividend.
For traders, the June $32.50 puts play perfectly for today’s downside trend in shares. Traders can likely see mid-double-digit returns, but should look to take profits if the share price gets to $30, and potentially look for a bounce here.
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.