One investor apparently thinks that the market is too worried
optionMONSTER's monitoring programs detected the sale of about
3,900 August 10 puts, most of which priced for $0.85. Volume was
almost 4 times the previous open interest in the strike, indicating
that this is new activity.
He or she is now obligated to buy shares in the software company
for $10 if they close below that level on expiration, but the entry
price would be $9.15 including the credit earned. If it stays above
$10, the trader will keep the $0.85 as profit and the contracts
will expire worthless.
RLD rose 3.10 percent to $11.97 yesterday. The stock lost
two-thirds of its value in the second half of 2011 before bottoming
out around $8 early this year. It then popped on a strong earnings
report in early February and has been moving sideways since.
occurred immediately before the company reported
better-than-expected fourth-quarter results.
had climbed to 78 percent before the release, versus its historical
34 percent reading. This suggests that options were overpriced, so
it made sense to sell puts. (See our
Some 8,600 contracts traded in the session, more than 80 times the
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