Navistar shares are crumbling today, and one investor apparently
thinks that the selling could intensify.
optionMONSTER's Depth Charge monitoring program detected a large
bearish trade in the truck maker, which has been struggling to
develop low-emission engines. Some 14,000 October 20 puts were sold
for $0.25 against previous open interest. Equal-sized blocks traded
in the November 18 calls, sold for $2.45, and the November 16 puts,
bought for $0.35.
Volume exceeded open interest in the Novembers, so it appears that
the investor closed a bearish position in October and rolled it
forward by one month. He or she collected a credit of $2.35 in the
process and stand to profit from NAV pushing lower. (See our
The trader may own shares and could be using the options to hedge
their position. If that's the case, he or she must now sell for $18
if the stock closes above that level on Nov. 16 but has ensured a
minimum exit price of $16. They would make more than that including
today's credit, but we don't know their cost basis from the earlier
NAV is down 7.3 percent to $19.04 in early afternoon trading and
has lost more than half its value since February. The stock has
spent the last four months trying to hold support around $20, its
lowest price since the start of 2009.
Today's bearish trade pushed total option volume to 9 times greater
than average so far today, according to the Depth Charge.
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