YRC Worldwide got crushed by a reorganization plan on Monday, and one trader is wagering that it will stay depressed for a while.
optionMONSTER's tracking systems detected the sale of more than 20,000 July 2.50 calls for $0.34. A block of 21,005 April 3.50 calls was purchased at the same time for $0.11 against existing open interest, indicating that a short position was rolled from one contract to the other.
The move is relatively unusual because the investor lowered the strike price at which the trucking stock would have to be sold. The trader also extended the amount of time by three months. In return, the investor collected a credit of $0.23.
YRCW rose 1.71 percent to $2.25 yesterday but has lost 47 percent of its value in the last month. Most of that drop occurred this week when the debt-laden company said it would issue stock to its lenders and unions in exchange for its obligations being forgiven. The move averted bankruptcy but significantly dilutes existing shareholders.
The stock has been trending lower since 2005, with the declines accelerated as the credit crunch hit in 2008.
Yesterday's call roll was probably the work of an investor who owns the stock and had sold the options as part of a covered call strategy. (See our Education section)
Overall optionvolume in YRCW was 8 times greater than average in the session.
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