One investor is confident that office-supply retailer Staples is
optionMONSTER's tracking programs detected the sale of 3,000 March
12 puts for $0.90. An equal number of December 12 puts was bought
at the same time for $0.25 but volume was below open interest in
those. The activity suggests that an existing short position was
closed and rolled forward in time.
It appears the investor had previously sold the December contracts,
looking for the stock to remain above $12. But now, with SPLS down
2.48 percent to $11.81 in afternoon trading, he or she faces the
possibility of being forced to buy shares at the close tomorrow.
The options were adjusted to avoid that from happening. Because the
trader added three months to the position, he or she was paid $0.65
to compensate for the prolonged downside risk. (See our
section for more on how options can be used to
turn time into money
SPLS has been working its way lower for years amid increased
competition and weak demand, but it's been holding its ground at an
eight-year low around $11 since the summer. That could make some
chart watchers think downside is limited and make them willing to
Total option volume is triple the daily average in the name so far
in the session.
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.
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