Market Overview Option Traders Hit The Jackpot On UPS News

Share: Option Traders Hit The Jackpot On UPS News Inc. (NASDAQ: STMP) shares jumped higher by more than 22% on Tuesday after the company announced a new partnership with United Parcel Service, Inc. (NYSE: UPS).

As part of the new partnership, at-home printing services will include discounted shipping rates due to its inclusion in the new UPS Digital Access Program. users will get up to 55% discounts on daily shipping rates and will not be subject to various surcharges.

Options Winners

While investors cheered the news, some large options hit the jackpot on Tuesday:

  • Oct. 25 calls with an $85 strike price and 193 open interest gained 2,683%.
  • Nov. 15 calls with an $80 strike price and 319 open interest gained 193.3%.
  • Nov. 15 calls with an $85 strike price and 267 open interest gained 336.0%.
  • Nov. 15 calls with a $90 strike price and 782 open interest gained 306.6%.
  • Jan. 17,2020 calls with a $90 strike price and 126 open interest gained 190.7%.

The weekly call holders were the biggest winners, but even the longer-dated out-of-the-money $90 call holders saw their positions nearly triple in value after shares took off on Tuesday. At least one UPS option trader seemingly got burned on the news after making a last-minute move on Monday just prior to the close.

At 3:20 p.m. on Monday, Benzinga Pro subscribers were alerted to an unusually large UPS option trade. The trader bought 500 UPS puts with a $113 strike price expiring on Friday. The trade was executed at the ask price of $1.031 and represented a $51,550 bearish bet.

UPS shares traded lower by 2% on Tuesday following the deal news but rebounded well above the $113 strike price of the puts after initially tumbling below $112. Those $113 weekly UPS put options traded lower by 59% in mid-day trading.

See Also: Spurned By USPS Denial To End Exclusivity Agreement, Takes Its Ball And Goes Elsewhere

Twitter Reacts

The big option gains were enough to get some twitter users talking on Tuesday.

Benzinga’s Take

When big, unexpected news hits, option traders can make the type of extreme gains mentioned above due to the leveraged nature of options contracts. However, as puts holders can attest, that leverage works both ways. Option traders can just as easily see positions become worthless overnight if the wrong headline hits. traded around $93.88 per share at time of publication.

Do you agree with this take? Email with your thoughts.

Posted-In: News Contracts Options Top Stories Markets Trading Ideas Best of Benzinga


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