Credit: Shutterstock photoWalgreen has bounced, but one trader is doubting the move.
optionMONSTER's Depth Charge monitoring system detected the purchase of 15,000 January 28 puts for $0.29 and the sale of an equal number of January 31 calls for $4. Volume was more than triple open interest in both strikes.
The trade resulted in a credit of $3.71 and is tantamount to selling shares in the pharmacy chain. It essentially locked in an exit price of $34,71, slightly above its $34.21 level at the time the transaction appeared. The investor probably owns WAG and is using the options to manage his or her position.
The trader stands to make money on the puts if WAG falls. One interesting thing about the position is that if the stock is below $31, they will keep their shares. Known as a collar , the strategy is popular hedging method used by investors looking to manage risk--especially when a stock is up. (See our Education section)
WAG is down 0.72 percent to $34.26 in early afternoon trading but is up more than 10 percent in since late November.
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.