Trade programs exit from Archer Daniels


Shutterstock photo

Archer Daniels Midland has been limping for months, and one long-term trade wants to put the stock out of its misery.

optionMONSTER's Depth Charge monitoring system detected the purchase of 2,600 January 2014 25 puts for $2.69 and the sale of an equal number of January 2014 30 calls for $1.81. Volume was below open interest at both strikes, indicating that a new position was implemented.

Known as a bearish collar , the trade cost $0.88 and is similar to shorting the grain-processing stock. The trader will make money if ADM drops toward $25 but will be forced to sell shares for $30 if it climbs above that level.

He or she is probably using the strategy to protect a long position in the name. (See our Education section for more on how calls and puts can be used for hedging.)

ADM is up 0.07 percent to $27.18 in early afternoon trading but has fallen about 15 percent since the spring. It declined throughout June and July, capped by a weak quarterly report resulting from poor margins and volumes. The stock has been making a feeble attempt to rebound since then.

Today's bearish trade pushed total option volume in the name to twice the daily average, according to the Depth Charge.

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: ADM

More from optionMONSTER




Follow on:

Find a Credit Card

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