Didn't we pay our taxes some six weeks ago? Well, I guess H&R Block (HRB - commentary - Cramer's Take) is just getting around to tallying the numbers. I'm still waiting for my rebate. Anyway, shares of the tax preparer spiked up Monday, but are slipping fractionally today. Still, it looks like the $21 level will provide some support.
And that might be prompting people to sell the July 20 puts, which have traded over 12,000 contracts at 40 cents a pop. But when you mess you the tax man, you have to have a back-up plan. And in this case, that seems to be taking the form of buying the longer-dated October $20 puts, which have traded over 20,000 contracts.
Based on the price and the prior open interest, this appears to be an opening purchase. It might just be a seasonal play from this past tax season that will taper off come October. And remember , HRB has jettisoned its mortgage and loan business, so by the fall, it won't be showing much in the way of revenue gains.
And as I get ready for my midday nap, I should note that mattress maker Tempur-Pedic (TPX - commentary - Cramer's Take) is laying down 3% to $7.81. Though I suppose with the state of consumer spending, especially toward home furnishing, it's not too much of a surprise to see that shares of Tempur-Pedic are down over 17% in the past two weeks. Then again, we do spend half our life in bed, and if you don't have any money, it seems like it would be one item to upgrade. And the underside doubles as a bank!
But today's option looks like a massive withdrawal. Call buying had picked up on the heels of an upgrade from Oppenheimer. Today, July 7.50 and 10 calls are being sold at a rate of what equates to 30% the strikes' prior open interest. It's liquidation sale!
Steven Smith Blog Off-the-Radar Copper Play 6/30/2008 12:00 PM EDT Encore Wire's equites are rangebound. The options tell another story.
Steven Smith Blog The Selloff Need Not Deepen 6/30/2008 7:59 AM EDT I'm not looking for capitulation, and I think we can avoid a V-shaped bottom.
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
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