Ashley sells put options on Frasers stock

Frasers said Ashley the sold the put options with an expiry of September 2023 and a strike price of 900p, giving them an aggregated price of £1.8m.

A put option gives the holder the right, though not the obligation, to sell a security at a pre-determined price within a set timeframe.

Frasers, which confirmed the transaction on Monday, said it had first been informed on Friday, a day after the blue chip posted interim results.

The owner of Sports Direct, House of Fraser and Jack Wills reported a 39% jump in first-half profits, and despite the "challenging" macroeconomic environment reiterated full-year adjusted pre-tax profit forecasts of between £450m and £500m, compared to just under £345m a year previously.

However, the shares - which started the day close to 900p - fell sharply following the results, closing around 9% lower.

Russ Mould, investment director at AJ Bell, said: "Mike Ashley has a nose for a bargain, so investors may well sit up and take notice of his move to take advantage of a recent sell-off in the business he founded.

"A strong run in the Frasers’ shares was arrested by a negative reaction to its first half results; the market seems to be concerned about a lack of organic growth in the core sporting goods business.

"Ashley doesn’t seem too worried though. By selling put options at 900p he is putting himself on the hook to buy the shares at a significant premium to the current price. Committing the not immaterial sum of £1.8m suggests Ashley is confident has what it takes to ride out the current turmoil in the retail market and enjoy a strong recovery once consumer sentiment improves."

Ashley, who controls around 69% of Frasers, stepped back from the day-to-day operations in May this year after Michael Murray - his son-in-law - took over as chief executive.