Someone apparently believes that the market is too nervous about
optionMONSTER's tracking systems detected the sale of almost 1,900
October 38 puts for $1.20. Volume was more than 7 times open
interest at the strike, indicating that new positions were taken.
lets the investor collect income now in return for agreeing to buy
the stock in the event of a future selloff. If that drop doesn't
occur, he or she will keep the credit as profit. Such transactions
tend to occur on names that traders would be willing to own at
lower prices, so they can also be used to essentially
program buy orders
. (See our
section for more on how options can be used to manage risk.)
BID fell 0.5 percent to $41.83 in morning trading but is up 21
percent in the last three months. That gain, triple that of the
broader market, has come despite a weak earnings report in May.
The auction house is now back above the same $40 level where it
peaked in 2012 and earlier this year. That could make some chart
watchers think that it will remain above that $38 level where the
contracts were written.
has also remained elevated in the name, even as its
has waned. That also favors the put seller because it means options
are potentially overpriced.
More than 3,300 contracts changed hands in the name yesterday, more
than triple the daily average.
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