Put spread looks for traction in Toyota

By
A A A

One trader apparently thinks that Toyota is on solid ground.

optionMONSTER's tracking systems detected the sale of about 1,700 May 80 puts for $1.31 and the purchase of a matching number of May 77.50 puts for $0.82. At the same time, about 1,700 April 82.50 puts were bought for $0.53 and 1,700 April 80 puts were sold for $0.04.

Volume was below open interest in the April puts but not in the May conracts, indicating that a position was rolled from one month to the next. The April options were closed at a cost of $0.49 and the opening trade in May generated a credit of $0.49, resulting in no cost.

The point of the transaction is that the investor lowered by $2.50 the level at which he or she must buy shares in the Japanese auto maker. The trader probably opened the position sometime earlier, hoping that it would hold its ground. The stock has probably fallen more than anticipated, and the investor now wants more time for the trade to play out.

TM is up 1.18 percent to $82.51 today and 25 percent this year. It has mostly followed movements in the Nikkei and the yen.

Today's option strategy is known as a put credit spread , which makes money from the passage of time rather than a directional move. (See our Education section)

More than 7,200 contracts have traded so far in the session, which is more than 6 times the normal daily volume.



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: TM

optionMONSTER

optionMONSTER

More from optionMONSTER:

Related Videos

Stocks

Referenced

76%

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com