Trader looks to ride Quiksilver waves

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Put activity surged in Quiksilver today, but the trade wasn't necessarily bearish.

optionMONSTER's tracking systems detected the purchase of more than 12,000 May 4 puts, most of which priced for $0.35, against open interest of 273 contracts. A large block of shares was purchased a few minutes later, suggesting the use of a so-called delta-neutral trade.

ZQK The strategy is designed to isolate implied volatility in the name, letting the investor profit from option premium increasing regardless of which way ZQK moves. It works because they get long the name via the equity while getting short via the puts. This removes directional risk and lets them profit simply from increased volatility in the puts. (See our Education section)

ZQK is up 4.92 percent to $4.69 in afternoon trading. The surf-themed apparel stock has been moving sideways since last March, when it shot from $2 to $4.

It recently has pulled back from a surge higher on Dec. 9, when a French newspaper reported that Quiksilver might be acquired by luxury retail company PPR. Today's trade is apparently looking for another surge of volatility.

Overall option volume in ZQK is more than 110 times greater than average so far today.

(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.

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This article appears in: Investing , Options

Referenced Stocks: ZQK

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