The food-safety company Ecolab has bounced off support levels
but attracted a large put spread today.
ECL is up 0.85 percent on the day to trade at $51.17. It bounced
off of support at $50 last week after falling from above the $52
level hit earlier in the month.
While the average daily option volume in ECL is just 75 contracts,
more than 38,000 have changed hands today, almost all of that in
one put spread. After a couple of broken trades, an investor ended
up long 18,478 May 50 puts for $0.85 and short 18,951 May 45 puts
for $0.05 (the original prints were for 19,000 on both sides).
The volume at both strikes far exceeded the previous open interest.
In fact, the highest open interest at any strike was 594 in the
July 45 puts.
Just seconds after the option activity, a single block of 530,628
shares of ECL were bought for $51.10 in a trade that amounted to
almost half of the day's total volume. The shares are equal to the
delta of the options, so they certainly seem to be related. (See
our Education section)
It appears that the put spread was traded against the shares as a
long volatility play with earnings looming on April 26. The average
implied volatility is well above the realized volatility, but right
in the middle of its recent range.
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