One investor apparently thinks that KKR will be trapped in range for all of next year.
optionMONSTER's tracking systems detected the sale of 17,000 January 13 puts for $2.28 and the same number of January 15 calls for $1, resulting in a credit of $3.28. Volume was more than 21 times open interest in both strikes.
Known as a short strangle , the position is designed to make money from the passage of time rather than a directional move. The trader will get to keep the entire $3.38 if KKR stays between $13 and $15, but the gains will erode outside that range and turn to losses below $9.72 and above $18.28. (See our Education section)
KKR is up 0.89 percent to $12.46 in early afternoon trading. The private-equity firm has been drifting sideways since the market crashed over the summer. Given that the midpoint of the strangle is above its current stock price, today's trade reflects a belief that there is modest upside in the shares before they stall.
Total option volume is more than 120 times greater than average in the name so far today.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.