Tempur-Pedic is slamming into resistance, and one investor is
heading for the exit.
optionMONSTER's tracking systems detected the sale of 2,500
December 36 calls for $1.10 and $1.15 against open interest of 851
contracts. The trade pushed total options volume in the mattress
company to 5 times greater than average.
TPX fell 0.79 percent to $36.62 in morning trading but has rallied
30 percent in the last three months. The company announced
better-than-expected earnings on Oct. 19 and raised guidance in its
eighth consecutive strong report.
The stock peaked at $38.01 yesterday, slightly above its highs
around $37.70 from late 2007 but was unable to hold those gains.
Given this elevated price, today's option trader apparently thinks
that TPX has little additional upside potential.
Selling calls lets the investor earn income from that belief. The
contracts may have been written against a long position in the
stock as a means of locking in an exit price, or as a simple short
strategy. (See our Education section)
(Chart courtesy of tradeMONSTER)
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