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Trade counts on big move in Avon

Chris McKhann (chris.mckhann@optionmonster.com)

A large volatility trade is betting that shares of Avon Products will make a big move up or down in coming months.

optionMONSTER systems show that a block of 18,625 of the August 13 puts was bought for the ask price of $0.35. The previous open interest in the strike was just 30 contracts, so this is clearly a new position.

Less than a minute later, 350,000 shares of AVP shares were purchased in one print for $14.55. The combination of stock and options creates a delta-neutral play that is looking for AVP to move sharply higher or lower before mid-August and/or for its volatility to be greater than that implied by the pricing of the puts. (See our Education section)

AVP finished the week at $14.51, up fractionally on the day. The cosmetics company was down at 52-week lows near $13 in early May but was testing overhead resistance at $15 less than two weeks ago.

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