Put roll keeps hope alive in Goldman

By David Russell,

Shutterstock photo

Goldman Sachs has been bleeding lower, and one investor is hoping the tide will turn.

optionMONSTER's monitoring systems detected the purchase of about 19,000 May 110 puts for approximately $10 and sold a matching number of June 110 puts for roughly $11. Volume was below open interest in May but not in June, which indicates that an existing short position was closed and rolled forward by one month.

The investor had probably sold the May contracts when GS was trading higher, looking for the brokerage stock to hold its ground. But then it pushed lower and now those puts are in the money, which places them at risk of being forced to buy shares for $110.

Today's trade delays that risk by another month and allows them to collect $1 of premium as they wait. Their position now is similar to being long because short puts will profit from a rally in the share price. (See our Education section)

GS is off 1.54 percent to $100.56 in early afternoon trading and down 13 percent in the last month. The brokerage and investment-banking stock rallied along with other financials early in the year but has struggled more recently amid worries about Europe and as a deleveraging economy dries up business opportunities.

Today's put roll pushed total options volume in the name to triple the daily average.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: GS

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