Strategy looks to exit Clorox position


Shutterstock photo

Somebody is bearish toward Clorox.

optionMONSTER's Depth Charge tracking system detected the purchase of 7,806 October 62.50 puts for an average premium of $0.575. An equal number of October 67.50 calls was sold for $3.70. Volume was more than 8 times open interest in both strikes.

The trade resulted in a credit of $3.125 and was probably the work of an investor who owns shares in the consumer-products company. They ended Friday up 1.11 percent to $69.47 on Friday, meaning that the calls sold were in the money.

As a result, the trader is willing to accept a maximum of $70.625 if CLX closes at or above $67.50. Below that level, the sale price will fall to $62.50, where the puts kick in. But including the credit earned, the position is guaranteed to get a minimum $65.625.

The stock swung wildly in the last three months, driven higher by a takeover offer from Carl Icahn in July and then lower by the early-August market selloff.

Overall option volume in CLX was 10 times greater than 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: CLX

More from optionMONSTER




Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by