Put seller navigates Garmin position

By David Russell,

Shutterstock photo

Garmin has been on tear, and one investor has been using puts to navigate the trade.

optionMONSTER's tracking systems detected the sale of 2,900 April 43 puts for $0.51. An equal number of April 35 puts were sold at the same time for $0.06, but volume was below open interest in the strike.

That suggests the investor had previously sold the 35s to earn a credit. Then the shares rallied, and he or she is now rolling the position to the higher strike to bring in an additional $0.45 of income.

GRMN fell 1.17 percent to $48.29 yesterday. The maker of global-positioning systems is up 50 percent in the last six months as it rallies against short interest and finds new growth in fitness devices. It ripped higher earlier in the week after results crushed estimates and management provided strong guidance.

The stock is still significantly above the $43 level where the investor would be forced to buy shares on a pullback. He or she probably expects GRMN to hold its ground, rendering the puts worthless. (See related column by Chris McKhann)

Overall options volume was triple the daily average in the session.

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: GRMN

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