RB Trader Sees Unusual Option Activity In Genworth Financial

The January 9.5 calls are getting some heavy volume in Genworth Financial

, with over 5,000 contracts trading on the offer at 0.30. This compares to only 54 contracts of open interest, or nearly 100 times the existing open interest. JPMorgan lowered the price target for Genworth shares to $11 from $18 this morning based on their cautious outlook. JPMorgan analyst Jimmy Bhullar said Genworth may record costs of $200 million to $300 million to bolster reserves at its long-term care businesses in the current quarter, with the company's ultimate shortfall may be more than $2 billion. Genworth Financial had fallen sharply in early November on an earnings miss, dropping from 14 pre-earnings to 7.17 post-earnings. Genworth is the largest U.S. long-term care insurance seller. It posted a record loss of $844 million in its third-quarter financial results, which it reported on November 5. The company incurred heavy costs from setting aside funds for long-term care policies.The stock has since recovered a third of the loss and is now trading at 8.95. The buyer of the calls is perhaps using today's stock weakness to position for continued upside on the shares, which have been fallen nearly 44 percent year to date. At the lowered price target of $11, the January 9.5 calls would have an intrinsic value of 1.50, or 5 times the .30 premium paid.