Protection adjusted in Tempur-Pedic

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Tempur-Pedic has had a pullback, and one trader is adjusting a protective position.

optionMONSTER's Depth Charge tracking system detected the purchase of 5,000 September 60 puts for $5.15. An equal number of December 70 puts were sold at the same time for $13.10 against existing open interest.

TPX fell 0.65 percent to $59.24 yesterday. The mattress stock more than doubled between last summer and mid-May amid strong demand in North America, leading it to issue bullish guidance at least twice so far this year.

In the last month, however, it's been drifting lower. It appears that yesterday's option trade resulted from an investor closing a previous holding in the December contracts. He or she then rolled it to the September expiration, producing a credit of $7.95.

The activity was unusual because options are typically rolled forward in time rather than backward. In this case, it appears that they have now reduced the amount of time they plan to hold the name.

Overall option volume was 12 times greater than average, with puts outnumbering calls by 28 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.


This article appears in: Investing , Options

Referenced Stocks: TPX

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