Weight Watchers (WTW) posted a slamming quarter this morning, the classic beat and raise, blowing away Street estimates. Shares are indicated to open higher by more than 11% this morning, light pre-market volume, but looks like it will be a big winner today.
On February 14th, Monday, I noticed very unusual action in the Weight Watchers (WTW) call options and put out the following note to subscribers:
"Weight Watchers (WTW) touching new highs today on big volume into earnings on 2/17 and call volume of 6,764 is 25X daily average, a block of 4,273 bought at $0.95 and more than 5,450 trading as opening buys in the February $45 calls, OTM with shares at $44 and Feb IV up 20% on the day. Put volume in non-existant and shares have been on quite a run on building volume lately, maybe due to the failure of all the diet pills with the FDA denying all parties. There was also substantial accumulation with big blocks of shares this morning. The $3.25B Company has also frequently been noted in takeover chatter, shares trading 15.9X earnings and 2.3X sales, not a bad value. Shares rose on 12/7 with BofA raising it to Buy with a $48 target. Weight Watchers has not been exactly blowing away earnings of late, but maybe the New Year brought about more business with obesity a continued concern in the US and abroad, although April tends to be the best month for shares."
Another 1,360 of these calls traded yesterday and the March $45/$50 calls also attracted some unusual activity.
Those $0.95 calls will be worth more than $6 today, more than a 500% return over the course of 3 days, and nominal more than a $2.15M profit.
Now that is a fat pay-day, but making a directional bet of that size the week of options expiration has me thinking someone had some insider information on the earnings number.
No comments:
Post a Comment