Put activity surged in Quiksilver today, but the trade wasn't
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
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)
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