Shares of portable storage company WillScot Mobile Mini Holdings Corp (WSC) are up nearly 47 percent in the past year. One trader sees a pullback ahead in the coming weeks.
That’s based on the September $35 puts. With 36 days until expiration, 3,082 contracts traded compared to a prior open interest of 104, for a 30-fold increase in volume on the trade. The buyer of the puts paid $0.35 to make the bearish bet.
The stock last traded around $41, so it would need to shed $6, or nearly 15 percent, for the option to move in-the-money. A move lower would buck the company’s current uptrend, as shares are right near their 52-week high of just over $42. The move higher as occurred as the company just reported strong earnings last week.
The company has been growing strongly, with earnings up 260 percent over the past year. However, with a slowing economy, earnings growth may also slow, which could punish shares.
Action to take: Shares could potentially come down slightly from here, following their post-earnings rally. Interested investors may want to consider shares on a big pullback, rather than follow the current short-term trend higher.
For traders, the put options are inexpensive – and may be a dud if the stock doesn’t drop. But following a post-earnings jump, shares may give up some of those gains in the days ahead, which could lead to some quick profits on the downside, likely in the mid-double-digit range.
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.