One investor is bracing for a drop in Lockheed Martin, wagering
on a move to the key $80 level.
optionMONSTER's Depth Charge monitoring program detected the
purchase of 10,000 January 85 puts for $2. Some 20,000 January 80
puts were sold for $1 and another 10,000 January 75 puts were
bought for $0.57.
The trade cost $570,000, or $0.57 per contract. It will begin
generating leverage below $85, with a maximum profit of 777 percent
at $80. Gains erode at lower prices and the entire position becomes
worthless at $75. (See our
section for more on the strategy, known as a
LMT rose 0.07 percent to $89.98 on Friday and has been climbing
steadily for the last year. The defense contractor peaked above $95
earlier in the week, its highest price since the 2008 market crash,
but then tumbled along with the rest of the market.
The butterfly trade targets the same $80 level where LMT hit
resistance throughout 2011 and then bounced in May. Some chart
watchers may consider that a likely support area if sellers begin
unwinding the stock.
Overall option volume was 20 times greater than average in the
session, according to the Depth Charge. Puts outnumber calls by 47
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