Office Depot is down 21 percent in the last month, and now one investor is calling a bottom.
optionMONSTER's tracking systems detected the sale of 8,075 June 6 puts for $0.30 and $0.35 against open interest of 5,371 contracts. The trade accounted for almost all the options volume in the office-supply retailer so far today.
ODP fell 1.56 percent to $6.33 in morning trading. The stock got punished following a weak earnings forecast on April 27, when it gapped lower one session after leaping to a new 21-month high of $9.19.
The selloff caused implied volatility in the name to surge to 67 percent from 45 percent, which pushed up the value of the put contracts. Today's put seller is taking advantage of that move to earn income.
The trade expresses a belief ODP will remain above $6 through expiration, although the premium earned will protect them against losses as long as the stock doesn't fall below about $5.70.
The transaction may have been implemented by an investor who expects the shares to hold this level or by a bear who sold the stock short and is looking to earn extra income and lock in an exit price on their position.
(Chart courtesy of tradeMONSTER)
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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.
