Markets

Why large put seller is targeting ING

One investor wants to make money from ING without owning the shares or paying a penny.

optionMONSTER's monitoring programs detected the sale of more than 4,000 December 8 puts on the Dutch financial conglomerate for $0.40. Volume was almost 4 times open interest in the strike.

This put selling is a bet that ING will hold its ground or push higher in the next two weeks. If that proves right, the trader will keep the premium while the puts expire worthless. Even if the bet is wrong, the income generated will cushion the blow of being forced to buy shares, lowering the entry price to $7.60.

The transaction is noteworthy because it occurs at the point in the expiration cycle when options lose value most quickly. (See Chris McKhann's recent discussion of how selling puts can be an effective and safe strategy despite appearing risky.)

ING rose 4.46 percent to $7.96 on Friday, failing to hold its earlier highs above $8. The stock has followed the trajectory of most other European financials, which bounced hard last week as policy-makers rushed to avert debt contagion.

About 2,000 December 8 calls were also sold against open interest, which suggests that investors used the snap-back to exit bullish positions.

Overall options volume was 7 times greater than average in the name.

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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