Jakks: Traders Positioning for Lower Prices

By Mike Yamamoto

Jakks Pacific (JAKK) gapped down yesterday on a convertible-bond sale, and traders are still positioning for lower prices on the toymaker.

optionMONSTER's tracking programs detected heavy call selling and unusual put buying in the toymaker, which typically trades fewer than 150 contracts per day. The March 12.50 calls were the most active strike, with most of the sales pricing for $1. Volume totaled 979, or 12 times existing open interest.

JAKK is off 0.59 percent to $11.87 in afternoon trading and is down 19 percent in the last month. The shares traded as high as $16.26 last week after a strong earnings report on Oct. 21 and have been falling ever since.

Other investors sold the June 12.50 calls for $1.35. Some 626 contracts changed hands against no existing open interest. The March sellers are positioned to make money if JAKK stays below $13.50 by expiration, while the June traders are looking for a close below $13.85 three months later.

Another investor also purchased 500 June 7.50 puts for $0.50 against no existing open interest.

Overall options volume in JAKK was 18 times greater than average today.

(Chart courtesy of tradeMONSTER)

Comments

[talld:]

You were so convincing I spent the evening attempting to see if I could understand what is going on with this stock. The only thing I can see is it appears to be related to china somehow, and the Hong Kong market.

There is also a sudden correlation to several unrelated stocks including EMN, AIR, WWW, ZNT, BBG, IVE, JBL, AIR VTI etc. None of these stocks are similar, which leads me to believe they are all in the same ETF.

That is another possiblity that JAKK has recently been added to an ETF. Whatever is going on with JAKK, there might be something similar going on with WWW and EMN. It seems more significant than analyst changing their position, whatever it is. But I totally agree there is something going on there.

Nov 06 12:36 AM

[talld:]

Found some more information on it. It appears to be news, and it appears that someone found out about it yesterday. Check out this Yahoo graph of JAKK and the five stocks I said above were trading similarly.

Together they create a braided rope, and whenever something which was part of a braid is no longer moving with the braid, it indicates pending news. Check out this link to see what I mean.

Well, it appears that seekingalpha is clipping my link and making it worthless, so you will have to go to Yahoo and compare JAKK to www, air, josb, kss, it Look at it for either five days or one month.

Just in case the link works
finance.yahoo.com/echa...;range=5d;compare=jakk...

Nov 06 12:58 AM