Gildan Activewear is lifting itself from a long period of
consolidation, and one investor apparently thinks that there is no
optionMONSTER's tracking systems detected the sale of about 2,100
March 30 puts against open interest of just 860 contracts. A single
large block priced for $0.40, but some fetched $0.45 after the
share price dropped.
GIL fell 0.45 percent to $31.18 in morning trading but is up 11
percent in the last month. The company sells apparel such as shirts
and fleeces upon which other organizations print logos or
silkscreens. Its last earnings report on Feb. 8 beat expectations
amid strong demand.
The shares have been grinding sideways since last April, making
incrementally higher lows and following their 200-day moving
average. This month, it appears to be finding support above $30--a
level that had offered resistance in late 2010. Some chart watchers
may conclude that significant downside is unlikely, giving them
confidence to write protection.
The trade reflects a belief that GIL will remain above $30 through
expiration. If they're right, they will keep the premium; if
they're wrong, they will have to buy stock at the strike price.
Selling puts is a common strategy when investors want to take a
position in a name without shelling out cash to buy the underlying
shares. The benefit is that they don't need the stock to rise to
make money, but the danger is that they have similar downside risk
as owning shares. (See our Education section)
Overall options volume in GIL is 14 times greater than average so
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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