Masco shattered resistance yesterday, and option activity went
through the roof.
Our tracking systems detected a surge in both calls and puts on the
company, which sells an array of home-related products such as
Bristan showerheads, KraftMaid cabinets, and Cobra drain cleaners.
It started early in the session as investors purchased the December
13 calls for as little as $0.15. The shares would rally later in
the day, at one point gaining more than 8 percent, and the premiums
on those calls would jump as high as $0.55.
MAS ended the session up 5.82 percent at $13.10 amid heavy stock
volume. It spent about five months grinding between $10 and $12
(orange lines on chat) but began breaking out at the beginning of
Yesterday's move brought the shares above their 200-day moving
average for the first time since May. The rally was foreshadowed by
heavy buying in the April 14 calls on Tuesday. Those options traded
another 3,400 contracts yesterday, mostly for $0.90 and $0.95,
almost double their premium the previous session.
Interestingly, the busiest strike yesterday was the April 12 puts,
where an investor purchased a block of 25,000 contracts for $1. The
transaction occurred minutes after heavy buying in the stock, which
suggests that the puts were bought as a protective position on the
shares. (See our Education section)
Overall option volume in MAS was more than 230 times greater than
average in the session.
(Chart courtesy of tradeMONSTER)