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Tony Zhang Sees Unusual Options Activity In Whirlpool

Tony Zhang of OptionsPlay spoke on CNBC’s “Options Action” about unusually high options activity in Whirlpool Corporation (NYSE: WHR). He said it doesn’t trade very actively, but on Tuesday it traded more than 3.5 times the average daily options volume. A lot of that volume were puts that outpaced calls almost 2 to 1.

The company is going to report earnings on Wednesday and the options market is implying a move of 5.5% in either direction. The stock moved 4.7% on average on the event. Despite beating earnings in the last six quarters, one particularly bearish trade did stand out.

Somebody bought around 1,700 contracts of the July 23, $210-strike puts for $4.65. The trader laid out almost $800,000 to bet Whirlpool is going to trade at least 4% lower over the next few days. The stock has to trade to $200 or about 6% lower for the trade structure to pay out a 1 to 1 risk-reward ratio.

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