One big trader apparently thinks that Tempur-Pedic might fall
out of bed again.
The mattress maker lost three-quarters of its value in a two-month
period last year. It's been rebounding since, more than doubling
from those levels, but now the bears are back.
optionMONSTER's Depth Charge monitoring program detected the
purchase of about 5,750 April 46 puts for $2.15 and the sale of a
matching number of April 42 puts for $0.70. Volume was more than 16
times the open interest at each strike, indicating that new
positions were implemented.
The trade cost $1.45 to open and will earn a maximum profit of 176
percent if the stock closes at or below $42 on expiration. (See our
section for more on the strategy, which is known as a
bearish put spread
because it leverages a move between two prices.)
TPX rose 1.04 percent to $46.49 yesterday but has spent most of the
month parked around the same level where it paused last May during
its big selloff. That could be leading some chart watchers to
believe that shares will hit resistance and roll over.
The timing of the next earnings release hasn't been announced yet,
but last year it occurred on April 19--the same day the options
bought yesterday expire this year--so they could move on the news.
More than 13,300 contracts changed hands in the session, 5 times
greater than average. Puts outnumbered calls by 15 to 1.
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.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.