Unusual Options Activity: Newell Brands (NWL)

Household product manufacturer Newell Brands (NWL) has been a poor performer this year, with the stock losing over 42 percent of its value. One trader sees shares rebounding in the next six months.

  • Special: See What One Ticker... One Trade... EVERY WEEK...Can Do for YOU
  • That’s based on the March 2024 $12 call options. With 177 days until expiration, 3,505 contracts traded compared to a prior open interest of 165, for a 21-fold rise in volume on the trade. The buyer of the calls paid $0.40 to make the bullish bet.

    Shares recently traded for about $9.50, so the stock would need to rise about $2.50, or over 26 percent, for the option to move in-the-money.

    Given how far shares have dropped from their 52-week high of $16.75, such a possible rebound is possible and the price range looks reasonable.

    Earnings have slid by 90 percent, and revenues are down by 13 percent over the past year. While that sounds bad right now, any increase could lead to a big rebound in shares.

  • Special: Legendary CBOE Trader Reveals: Make This ONE Trade Every Time The Government Drops Economic Reports
  • At present, the stock goes for less than 9 times forward earnings. And Newell trades for less than half its price-to-sales ratio, a sign the stock may have gotten oversold.

    Action to take: Investors can get a 3 percent dividend yield at current prices while waiting for a rebound.

    For traders, the March call options are an inexpensive bet on a strong move higher in the coming months. Traders can likely get high double-digit returns or even into triple-digit territory on a rally on Newell shares, even if the trade doesn’t move in-the-money.


    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 of the companies mentioned in this article.


  • Special: See What One Ticker... One Trade... EVERY WEEK...Can Do for YOU