Today’s tickers: MNST, MHP & ANN

MNST – Monster Beverage Corp. – Monster Beverage Corp. shareholders have had a rough week; the stock fell 10% yesterday following the company’s second-quarter earnings report and fell nearly 10% today to as low as $55.30 after Monster disclosed a subpoena from a state attorney general. According to the firm’s 10-Q the subpoena was received in July 2012 “in connection with an investigation concerning the Company’s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy(R) brand of energy drinks.” August expiry options activity suggests traders anticipate the stock may continue to selloff next week. The Aug. $55 strike put is the most heavily traded of the front month contracts so far today, with around 3,700 lots in play as of 12:10 p.m. ET. It looks like most of the $55 puts were purchased for an average premium of $1.01 apiece, thus positioning buyers to make money beneath the average breakeven price of $53.99. Traders betting on a more substantial pullback in Monster’s shares in the near term picked up around 1,000 put options at each of the Aug. $50 and $47.5 strikes, paying average premiums of $0.25 and $0.14 per contract, respectively. Traders betting against the likelihood of a rebound in MNST shares next week wrote call options at the Aug. $57.5 and $60 strikes, pocketing average premiums of $1.26 and $0.37 on the contracts. Call sellers keep the premium as long as the contracts are out-of-the-money at expiration. Overall options volume on the stock is well above the 90-day average daily volume, and roughly two puts are trading for each single call option in play.

MHP – McGraw-Hill Companies, Inc. – Trading traffic in far out-of-the-money call options on McGraw-Hill may be the work of an investor positioning for shares in the publishing giant and owner of Standard & Poor’s to rally to the highest since 2007. Shares in MHP are up 0.85% today at $49.12…
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