Advance Auto Parts has been drifting lower, and doubts persist among traders.
optionMONSTER's tracking systems detected the sale of 5,000 December 60 calls for $2.95 against open interest of just 638 contracts. Some 4,000 October 60 calls were bought at the same time for an average premium of $1.225, but volume was below previous positioning.
This activity suggests that an existing short position in the calls was rolled into the future. The investor may own shares against the options or could simply be looking to ride the name lower. (See our Education section)
Regardless, the trade reflects a belief that the seller of car accessories will stay below $60 through expiration. In return for taking that risk, yesterday's investor pocketed a credit of about $985,000.
AAP fell 3.1 percent to $56.30 yesterday and has been declining since mid-May, when it collapsed shortly after making an all-time high above $72. The earnings history has been mixed, with profit beating on Aug. 10 but missing three months earlier. Its next earnings report is scheduled for Nov. 10.
Overall option volume was 16 times greater than average in the session.
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