Container Store went public last month, and now traders are for
optionMONSTER's Depth Charge monitoring system detected the
purchase of 4,000 April 40 puts for $3.40 and the sale of an equal
number of April 45 calls for $2.94. Volume was more than 30 times
the previous open interest at each strike, indicating that new
positions were initiated.
Owning puts locks in the price where shares can be sold in the
specialty retailer, while selling calls locks in a level where they
must be sold. Combining the two sets maximum and minimum exit
prices, helping the investor manage a position in the stock.
Known as a
, the trade cost a $0.46. They will receive a net $39.54 if it
closes below $40 on expiration and a maximum of $44.54 over $45.
Between $40 and $45, the options will expire worthless and they'll
keep their shares. (See our
section for other risk-management techniques.)
TCS dropped 8.13 percent to $40.25 yesterday but has more than
doubled since it began trading on Nov. 1. Its share price was
originally proposed at $14 to $16 in late October, but that level
was raised to $18 amid strong demand.
The stock peaked at $45 earlier in the month, which could make some
investors think that it will offer resistance and help explain
yesterday's collar trade.
Total option volume was 54 times greater than average in the
session, according to the Depth Charge.
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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