Overstock.com has been falling after a big earnings miss last
week, and now one investor is calling a bottom.
optionMONSTER's tracking systems detected the sale of 4,000
December 15 puts on the Internet-based retailer against open
interest of just 94 contracts. Most of the volume priced for $2.15.
OSTK fell 6.61 percent to $14.98 in afternoon trading and is down
24 percent in the last week. The company stunned investors when it
announced an unexpected second-quarter loss after the bell on Aug.
5. Revenue missed forecasts by a wide margin, and profitability
The drop sent the shares tumbling through their 200-day moving
average (purple line on chart) and back to levels last seen in
By selling puts, today's option trader is reflecting a belief that
OSTK is done falling. The strategy lets the investor get paid in
return for providing protection to other investors. Given the
premium earned, he or she will make money as long as the stock
closes above $12.85 on expiration. (See our Education section)
At least one analyst raised questions about potentially improper
trading before last week's news was made public.
Today's activity pushed total option volume in the name to 7 times
greater than average.
(Chart courtesy of tradeMONSTER)