MetLife is consolidating after a rally, and investors are
optionMONSTER's Heat Seeker monitoring program detected a surge of
activity in the December and March contracts as a large upside
strategy was apparently extended. An even 50,000 contracts traded
each in the December 30 puts (bought for $0.630), the December 40
calls (bought for $0.29), and the December 35 calls (sold for
All three traded against open interest, suggesting that existing
positions were closed. Around the same time, similar-sized
transactions appeared in the March 35 calls for $2.47, the March 30
puts for $1.31, and the March 42 calls for $0.51. Volume was below
open interest in the March contracts.
The strategy combines a vertical spread with short puts. Premium
from selling the downside puts and upside calls reduces the cost of
owning calls that are near the money. That boosts the traders'
leverage to the upside while obligating them to buy shares on a
drop to $30.
MET is up 1.95 percent to $35.55 this morning and 15 percent since
the start of August. It's been fluctuating in a range for the last
month while making higher lows, which could be leading some chart
watchers to believe that it will continue to appreciate.
Overall option volume is 42 times greater than average so far
today, according to the Heat Seeker.
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