While shares of Under Armour are up about 12 percent in the three-month period, at least one major trader is readying for a decline in the stock’s price.
Optionmonster.com said today its tracking program showed a sale of 3,000 monthly May $38 put options for $1.10 and 3,000 weekly $35.50 put options to expire June 10 for 80 cents.
Analysts at the site described the move as a large trader who “is positioning for a possible decline in Under Armour.” Shares were down 0.6 percent to $37.17 during the midday session.
Optionmonster.com said “volume was below open interest in the May contracts, indicating that a bearish position was rolled forward by a month to a lower strike.” Long-put options lock in the price “where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop,” the analysts said in their note, adding that shares of the company fell more than 4 percent on Wednesday, but have been trading up about 12 percent in the three months.
Under Armour delivered a robust quarterly report two weeks ago and Jorge Martin, Euromonitor analyst, noted that the brand surpassed Adidas in U.S. sportswear sales and “is doing exceptionally well in Europe.” Martin said the company “posted double-digit growth in 2015, with Germany and the United Kingdom remaining the most important markets in Western Europe.”
“It is still far away from giants like Nike and Adidas, but it is increasingly seen as a force to be aware of,” Martin said. “The brand has an increasing media presence, which has been the main driver behind its performance outside the U.S.”
Martin said Under Armour has managed to “successfully position itself as an alternative to Nike and Adidas, tapping into sports with a strong tradition in Western Europe (football, running) and offering a wide product portfolio for men, women and children alike.”
In the U.S., Martin said the brand ranks second in sportswear behind Nike, “replacing Germany’s Adidas. In Europe the brand has still a long way to go in this regard. However, we expect healthy growth in 2016 and beyond, with the company gradually closing the gap with the two giants.”