Traders think the bottom is finally in place for coal miner
optionMONSTER's Heat Seeker monitoring system detected the purchase
of some 5,000 August 12 calls for $1.17 and the sale of an equal
number of August 8 puts for $0.60. Volume was more than 18 times
the previous open interest at each strike, indicating that new
positions were initiated.
locks in the price where shares can be purchased, while
obligates the investor to buy them at lower prices if WLT craters.
Combining the two methods is similar to owning the stock, but at a
much lower cost--in this case, $0.57.
The position will expire worthless if the stock remains between $8
and $12 in the next seven weeks. It's probably intended to give the
investor a cheap way to profit from a sharp rebound while
programming a buy order at a much lower price. (See our
section for more on how options can be used to manage trades.)
WLT is up 0.38 percent to $10.44 in morning trading. The stock has
lost more than 90 percent of its value in the last two years and is
now attempting to bounce at its lowest price since late 2004.
Short interest represents about one-third of the float and the
shares trade at about two-thirds of book value, which could also
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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