Trade is betting that Avon can hang on

By David Russell,

Shutterstock photo

At least one trader apparently thinks that Avon Products has taken enough of a beating.

The cosmetics stock has lost about 40 percent of its value in the last six months and is attempting to hold support at a 2-1/2 year low after a disastrous earnings report on Oct. 27.  

optionMONSTER's monitoring programs detected the sale of 17,400 December 16 puts for $0.20. Volume was more than 45 times open interest in the strike.

The trade reflects a belief that AVP won't fall much further. If it does, the investor is willing to buy shares for $16. It's down 0.11 percent to $18.21 in morning trading.

Investors sell puts to earn income from the passage of time . Today's trade hinges on the key $18 level, which has served as a base for the shares since early October. (See our Education section)

Overall option volume in the name is triple the daily average so far today.

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: AVP

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