As the market heads into the red during Tuesday's trading
session, options volume out of the gate remains extremely light.
However, an investor in Brazilian steel and iron name
Vale S.A. (NASDAQ: VALE )
boosted put volume during morning trading as the shares are on a
significant decline. The investor could be calling for upside
during the short term and expressed that bet by selling a
front-month put spread.
Around 10:14 a.m. EST, a block of
5,700 July 24-26 put spreads changed hands for a
premium of 92 cents per spread.
The July 24 puts crossed the tape for an average price of 67 cents
while the July 26 puts traded for $1.59 per contract. By 10:20 a.m.
EST, roughly 7,000 contracts had changed hands in these lines, and
the lower-strike puts are home to current open interest of 4,700
contracts while the higher-strike puts are home to current open
interest of 8,700 contracts. This options action suggests the
investor could have rolled down a long put position to the
24-strike from the 26-strike on a bet that VALE shares could drop
slightly more than the original options trader anticipated during
the next couple weeks prior to July options expiration.
VALE did not announce any news today, but yesterday the company
said its chief financial officer quit and the stock continues to
experience pressure because of pledges out of the G-20 summit to
reduce spending. VALE dropped $1.82, or more than 6%, to