Options Trades in 3D Systems

The struggles of momentum names are well-documented. Money is finding its way into utilities, real estate investment trusts and now consumer staples. The earnings parade continues and 3D Systems (DDD) has to be considered one of those momentum names that has had its wings clipped. The stock is down nearly 50% for the year, which also coincides with how far it sits from its highs. When a momentum name loses its, well, momentum, 50% will still seem like a lot to anyone not familiar with these types of moves, but anyone who remembers 2000 knows that would just be the start.

Still, when I look at the stock around earnings, the 9.9% priced in by the options seems to be a bit high. Yes, more than a quarter of the float is short and momentum names have struggled, but the short interest has been high for quite some time, and momentum swings both ways. Looking at the current implied volatility in the options along with the past moves, there are a couple of trades here. For the very adventurous, shorting straddles or using iron condors, my preference, seems like a decent risk-reward. The stock seems to have a bit of a delayed reaction, so I would look to close anything like that out quickly....174 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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