Credit Suisse Group AG (CS) Call Options in Play on a Down Day for Financial Stocks

Textron Inc. (NYSE:TXT) – Options activity on the maker of military and civilian aircraft suggests some traders are bracing for shares in Textron to extend losses in the near term. The stock fell more than 13% this morning to an intraday low of $25.37 after the company lowered its guidance for full year earnings. Fresh interest in far out-of-the-money puts on Textron look for the price of the underlying to potentially slide to the lowest levels since July of 2012 during the next couple of months. Traders snapped up 250 puts at the May $23 strike for a premium of $0.21 each, around 150 lots at the June $23 striking price at a premium of $0.35 apiece, and purchased roughly 500 puts at the June $24 strike for a premium of $0.58 per contract. Buyers of the June $24 strike puts start making money if shares in Textron decline another 8% off today’s low of $25.37 to breach the breakeven point on the downside at $23.42 by June expiration.

Caitlin Duffy
Equity Options Analyst

The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.