Trade looks for a bottom in Hhgregg


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One investor is trying to call a bottom in Hhgregg.

optionMONSTER's tracking programs detected the sale of 1,873 May 10 puts for $0.30 and the purchase of an equal number of April 11 puts for $0.45. Volume was below open interest in April but not May, which suggests that an existing short position was rolled from one contract to the other.

The trader apparently sold the April contracts at an earlier date hoping that the electronics-retail stock would hold its ground. Now that it's failed to do so, he or she extended the position by another month.

HGG fell 1.65 percent to $10.71 yesterday. It peaked around $16 in early December but crashed over the next two months and has been attempting to hold its ground at $10 since. Similar to competitors such as Best Buy, the company faces a market niche with evaporating profit margins and weak sales growth.

Yesterday's call roll cost a net $0.15, but the investor lowered the level at which the stock must be purchased. If the adjustment hadn't been made and HGG closes below $11 today, the trader would be assigned shares at the strike price. (See our Education section)

Overall option volume was 16 times greater than average in the session.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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