Bulls Eye Avon Products Put Options

  Today’s tickers: AVP, CAT, AMD & GM AVP  - Avon Products, Inc. –  Options traders exchanged more than 5 times as many put options as calls on Avon Products today, but it looks like most of the volume was generated by near-term bullish players. Shares in the global manufacturer and marketer of beauty products are currently down 0.85% to stand at $28.10 this afternoon. More than 14,000 put options changed hands at the May $26 strike on paltry previously existing open interest of 644 contracts. It looks like the majority of the puts were sold for a premium of $0.30 a-pop. Put sellers keep the full $0.30 premium per contract as long as Avon’s shares exceed $26.00 through expiration day next month. The deep out-of-the-money puts currently tout a delta of 0.20, or roughly a 20% chance of landing in-the-money. But, Avon Products is slated to report first-quarter earnings before the opening bell on May 3, 2011, and an earnings miss that sends shares in AVP lower, and therefore the delta and premium on the puts higher, could place put sellers in far less comfortable positions. Put sellers could have large amounts to stock put to them at an effective price of $25.70 – after factoring in the $0.30 premium received – if shares in Avon Products plunge 7.5% from the current price of $28.10 to trade beneath $26.00 at expiration. Shares in AVP have exceeded $26.00 since June 9, 2010. CAT  - Caterpillar, Inc. –  Shares in the machinery maker joined in on the broad market decline today after Standard & Poor’s Rating Service cut the U.S.’s long-term credit outlook to negative on rising budget deficits and debt. Fears at home add to global concern that economic growth may slow in the event that Greece winds up in default. Caterpillar’s shares fell as much as 4.7% during the first half of the session to touch an intraday low of $102.16. Trading patterns in the weekly options suggest some investors are speculating on an immediate rebound…