Markets

How trader is protecting FTI position

FTI Consulting is hovering, and one investor is hedging.

optionMONSTER's Depth Charge tracking program detected the purchase of 5,300 March 30 puts for $0.65 and the sale of equal number of January 30 calls for $0.05. Volume was below open interest in the Januarys, which suggests that a protective position was rolled from one strike to the other.

The trade cost the investor $0.60 and will provide an additional two months of downside exposure on the business consultancy. A similar trade also took place in the January 35 puts and the March 35 puts at a cost of $0.82.

FCN is up 1.84 percent to $42.68 this morning and 22 percent in the last three months. The stock initially rallied along with the rest of the market in October, then continued to make new 52-week highs after a strong earnings report on Nov. 2. (See researchLAB for more)

Today's option trade is probably the work of an investor who owns shares in the company and is looking to protect them against a pullback. Adjusting the position now protects it from the accelerating pace of time decay that will occur over the next five weeks, which would erase the value of those January contracts. (See our Education section)

Overall option volume in FCN is 38 times greater than average so far today, with puts outnumbering calls by more than 8,000 to 1, according to the Depth Charge.

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.

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