Traders apparently think that VeriFone is a safe bet as the
former high-flying stock attempts to hold a key support level.
optionMONSTER's tracking programs detected the sale of about 2,300
December 30 puts for $1.80. Volume was almost quadruple previous
open interest at the strike, indicating that new positions were
The investor is now obligated to buy shares for $30 if they close
below that price on expiration, but including the credit earned
their entry price would be $28.20. Above $30, the puts expire
worthless and they'll keep the premium as profit.
PAY is up 4.6 percent to $30.23 in early afternoon trading. The
maker of credit-card readers enjoyed a huge rally between March
2009 and March 2011, climbing from below $4 to over $50. It's been
churning since then as earnings results have weakened and is back
to a consolidation level from about two years ago, which could be
leading some traders to believe that it's now at support.
when they like a stock and expect downside to be limited. The
benefit of the strategy is that it doesn't require any cash up
front and lets investors profit from the normal process of time
decay, which lowers premiums as expiration approaches. The risk is
that a major decline occurs in the share price, forcing them to own
the stock for more than it's worth. (See our
section for more on how to turn
time into money
Some 3,600 contracts have traded so far today, more than quadruple
the daily average.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.