by Andrew Houghton and Nick Atkeson 05/02/08
On April 21, Rohm and Hass (ROH) reported a quarter that was slightly higher than analysts' estimates. Then, the first bump came.
On April 22, the company gave Q2 EPS guidance below Reuters' consensus estimates. Within hours, two investment bank research departments downgraded the stock.
This bumpy news flow appears to have been predicted by options investors who bought 5,000 ROH May 55 Puts (ROHQK) for $2.15 on April 3. The option investor has kept his or her position on in anticipation of further downward movement in the stock.
Although the stock has moved down, the options have eroded with time and have yet to appreciate. When looking at the unusual trades in ROH over the past year, it appears that option investors have a good sense for when the stock is going up or down. When in Rome, do as the "Rohmans" do.
For more fresh options trading ideas from Andrew and Nick, click here.
