Office Depot is trying to fix its business model, and one trader
is betting that it will succeed.
optionMONSTER's tracking programs detected the sale of 2,500
October 2.50 puts for $0.25 against open interest of just 22
contracts. The trader is now obligated to buy shares of the
office-supply retailer for $2.50 if they fall below that level.
If they remain above it, however, he or she will get to keep the
$0.25 credit as the puts expire worthless. The
is an example of how investors can use options to make money from
passage of time
without spending cash up front. (See our
ODP is up 2.72 percent to $3.21 today. Shares rallied about 70
percent between the start of the year and late March, then
retreated. This week they bounced around the same $3 level where
they consolidated in February and found support after pulling back
the next month.
The stock also peaked around $2.60 in October, which could be
leading some chart watchers to expect support around that level and
help explain today's trade.
Management has been taking steps to improve margins by cutting
expenses and selling fewer items at discount prices. That allowed
its last earnings report on Feb. 28 to beat expectations.
The put sale accounted for almost all the option volume in ODP
today and pushed its total activity to more than twice the average
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