Alternative protein producer Beyond Meat (BYND) has been in a multi-year downtrend, with shares down over 40% in the past year. One trader sees further downside in the weeks ahead.
That’s based on the March $5 puts. With 24 days until expiration, 12,527 contracts traded compared to a prior open interest of 284, for a 44-fold rise in volume on the trade. The buyer of the puts paid $1.30 to make the bearish bet.
Beyond Meat shares recently traded for about $4.00, making the $5 puts about $1.00 in-the-money. Shares have had a slight trend higher since the start of the year, coming off their 52-week low of $3.30.
Operationally, Beyond Meat has fared just as poorly as shares. Revenues rose 8% over the past year, but the lack of consumer demand for alternative proteins has kept a lid on shares, and growth has been negative. Losses have mounted, and Beyond Meat recently had a negative 83% profit margin.
Action to take: With shares in a downtrend, investors interested in going long should hold off for now, as more downside is likely ahead.
For traders, with shares looking like an obvious short, the $5 puts look attractive. Given that shares are already in-the-money, the option likely has upside limited to mid-double-digit returns. More aggressive traders may want to use a lower strike price.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
