Markets

Protective trade drawn on Paychex

Protection buying is once again a theme in the option market, and this time the insurance is on Paychex.

optionMONSTER's tracking systems detected put buying in Activision Blizzard and Williams earlier this week as those stocks pushed higher, indicating that investors were using the contracts as insurance on long positions in the shares. Today, the activity is in the December 24 contracts on PAYX, with about 2,500 purchased for $1.25. Volume was more than 250 times open interest in the strike.

All three companies are noteworthy because they seem to have strong fundamentals but have declined amid the recent selloff. PAYX, for example, has consistently reported strong earnings and forecast continued growth the last time it issued results in late June.

The payroll services company has also returned to the top of its price range last summer, which could make some chart watchers think it's done falling and ready to rebound. The shares are now down 2.77 percent to $26.

Overall option volume in the stock is 4.5 times greater than average so far today, with puts outnumbering calls by 16 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.

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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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