A generic image of a dollar in front of a graph
Markets

Caution reigns in Alliance Data puts

Alliance Data has been going straight up, but traders are getting nervous.

optionMONSTER's Depth Charge monitoring system detected the purchase of 2,000 September 155 puts for $1.50 against open interest of just 48 contracts. The trade accounted for almost all the activity in the digital-marketing firm.

Puts lock in the price where shares can be sold, so they appreciate in value when the stock declines. Investors use them to insure long positions against declines or to speculate on a drop. (See our Education section)

ADS was down fractionally to $180.97 yesterday but is up 15 percent since April 18, when earnings beat expectations and management raised guidance. However, shares formed a " shooting star " pattern on Monday, which some chart watchers may consider evidence that a pullback is coming.

Total option volume was 12 times greater than average in the session, with puts outnumbering calls by 46 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ADS

Other Topics

Options