Staples held its own in a down session yesterday, and one
investor apparently thinks a major correction is unlikely.
optionMONSTER's tracking systems detected the sale of 5,070
September 19 puts for $1 versus open interest of just 94 contracts
in the strike. The trade came after the office-supply stock fought
its way back to even from an early drop despite the rest of the
market continuing to trend lower.
SPLS ended the session down 0.74 percent to $21.38 and is down 11
percent in the last month. The company's first-quarter profit beat
forecasts by a penny and management raised the lower end of its
Yesterday's put sale reflects a belief that SPLS will remain above
$19 through September expiration, though the premium earned will
protect the trader against an additional $1 to the downside. The
stock has also found support around the same $21.30 level from
which it gapped higher on Aug. 6, which may have given the put
seller confidence that the downside was limited.
Some traders had apparently feared results would miss expectations,
and purchased a bearish put spread earlier in the week.
Our monitoring programs also detected heavy activity in the May 22
puts, but volume at that strike was close to open interest. Most of
the trades were purchases, likely by investors who were buying the
stock and wanted to protect against a potential drop the remainder
of the week.
Overall options volume in SPLS was about four times the average,
with puts accounting for 91 percent of the activity.
(Chart courtesy of tradeMONSTER)
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