McGraw-Hill draws caution at highs

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McGraw-Hill is at multiyear highs, but traders are cautious.

optionMONSTER's Depth Charge tracking system detected the purchase of 5,732 August 45 puts for $1.35 and $1.40 against open interest of just 26 contracts. The activity dominated volume in the company on Friday, which normally sees fewer than 600 contracts in a session.

MHP rose 1.87 percent to $48.47 and has been climbing after agreeing to split into two businesses: one a publisher of college textbooks and the other a provider of financial data. It's best known as the parent of Standard & Poor's.

While the credit-ratings business has suffered, its equity indexes have flourished thanks to the popularity of exchange-traded funds linked to them. Two of MHP's last three earnings reports have beaten estimates.

The stock is now back to its highest price since late 2007. Given those gains, Friday's puts were probably bought by investors looking to protect long positions against a drop. (See our Education section for more hedging strategies.)



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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This article appears in: Investing , Options

Referenced Stocks: MHP

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