Markets

Bearish trade on Armstrong World

Armstrong World Industries has been flagging after a big run, and one investor wants out.

AWI

optionMONSTER's Depth Charge tracking program detected the sale of 1,593 December 45 calls for $3.80 and the purchase of an equal number of December 45 puts for $0.80. Volume was more than 4 times open interest in each strike.

The trade was probably the work of a shareholder who expects the stock to push lower. The transaction let him or her lock in an exit price of $48 if AWI remains above $45 through expiration. If it falls below that level, they will make money from owning the puts and keep the premium from the calls, hedging them completely against any drop that may occur over the next three weeks.

AWI is down 0.12 percent to $48.48 in morning trading but is still up 16 percent in the last month. The maker of building supplies gapped higher on Nov. 5 after reporting better-than-expected profit and raising its full-year guidance. The stock hit a 3 1/2-year high of $53.43 on the news but failed to hold those gains and has been drifting lower since.

Overall option volume in AWI is 13 times greater than average so far today.

(Chart courtesy of tradeMONSTER)

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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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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