Trade sees Staples holding ground

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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 Chart 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 guidance.

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)



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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: SPLS

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