Wild stock swings put Equifax options on traders' radar

NEW YORK (Reuters) - The heightened drama in Equifax Inc’s shares after the credit reporting company last week disclosed a massive data breach has turned its sparsely traded options contracts into one of the busiest names in the U.S. options market.

Trading information and the company logo are displayed on a screen where the stock is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 8, 2017. REUTERS/Brendan McDermid

Equifax shares have shed nearly a third of their value since Sept. 7, when the company said personal details of as many as 143 million U.S. consumers were accessed by hackers between mid-May and July in what could be one of the largest data breaches in the United States.

The shares tumbled further on Thursday to a more than 2-1/2-year low of $89.59 after the U.S. Federal Trade Commission said it has opened an investigation into the breach.

Volume of more than 23 million shares by early afternoon was already a record for any single day dating back to the company’s market debut in the early 1970s.

Equifax options had traded about 110 contracts a day this year before last week’s disclosure, but over the last four days the options have notched an average daily trading volume of nearly 50,000 contracts, according to data from New York-based options analytics firm Trade Alert.

“We are looking at a huge spike in activity. Equifax has really gone out of the frying pan and into the fire,” David Russell, senior manager at online broker E*Trade Financial Corp, in Chicago.

“It’s gone from a quiet buy-and-hold kind of name to a very actively traded company and it’s happened very fast.”

Thursday was the busiest day yet, with options trading volume hitting 127,000 contracts by 12:30 p.m. E.T. (1630 GMT).

Equifax options were the fourth most actively traded single-stock name in options market, ahead of market favorites such as Tesla Inc Facebook Inc and Inc.

Traders were buying near-term, far downside Equifax puts that would protect against a big slip in the share price over the next month, Trade Alert options analyst Fred Ruffy said in a note.

Contracts that guard against the shares dropping below $60 by mid-October were particularly busy.

Trading was not restricted to hedging activity as traders also took to the options market trying to profit from the wild gyrations in the stock price.

“Options traders like volatile, liquid stocks and suddenly Equifax is in that camp,” Russell said.

Reporting by Saqib Iqbal Ahmed; Editing by Meredith Mazzilli