Getting Ready For a CROCS Split (CROX)

Despite a myriad of employees and all the automatic trading systems updates at the exchanges and at every brokerage firm and quote feed, it’s amazing how often traders walk in one morning and try to figure out why a stock is down 47% on no news.  A stock split is usually the answer.  Friday morning when you get in front of your computer screen, CROCS Inc. (CROX-NASDAQ) will trade ex-split to reflect a 2-1 stock split. 

The stock closed today at $90.88 on nearly double normal volume.  So all things being equal, which they never are, the shares will be at $45.55.  The 52-week high of $93.58 will instantly drop down to $46.79, and the new 52-week low will drop down to $11.325.   

But tomorrow will be another special mark that will potentially affect trading more than usual.  Friday is options expirations date, so the JUN-07 $45 CALLS & PUTS will instantly be the new active strikes instead of the $90.00 strike.  The open interest as of Thursday morning was 4,756 contracts, but it’s hard to know what that will be in the morning since over 4,000 contracts today in the calls .  If that remains roughly the same pre-split then the open interest would be roughly 9,500 contracts in the calls.

CROX trades with a 44 trailing P/E and has a $3.63 Billion market cap; it has a forward P/E for fiscal earnings of 29.99 and trades at 5.24-times forward revenues.

Jon C. Ogg
June 14, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.