The bulls are piling into Nationstar Mortgage as the stock makes
optionMONSTER's monitoring systems detected a block of 2,600
January 20 puts trade for $2.95. That was the bid price at the
same, indicating that the contracts were sold.
when they like a stock but don't want to expend cash getting long.
It allows them to collect a credit in return for providing
protection to other traders.
In the case of yesterday's activity, the trader will have to buy
NSM for $20 if it closes below that level on expiration. But
including the credit earned, the
would be $17.05.
Put selling often occurs when a stock is rallying hard because it
prices in the possibility of a pullback. (See our
section for more ideas on how to manage entries and exits using
Investors also purchased about 2,300 January 22.50 calls for $3.70
to $4.10 throughout the session. Those trades reflect a strong
belief the stock will keep rallying into early 2012.
NSM rose 4.09 percent to $22.40 and is up 60 percent since going
public at $14 in March. The company has been gobbling up servicing
rights on residential mortgages in hope of a turnaround and now
stands to grow fee income as refinancing accelerates.
Total option volume in the name was 5 times greater than
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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