Options Trading News

October 11, 2012  Thu 1:47 AM CT

Nerves were on edge in Huntington Bancshares yesterday, with the stock near long-term highs and the broader market selling off.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 5,700 April 7 puts for $0.53. The volume was 11 times the open interest of 499 contracts in the strike at the beginning of the day, so this is clearly a new position.

The investors now have the right to sell shares in the Ohio-based regional bank for $7 in the next half-year, regardless of how low they fall. This protective hedge precludes the need to sell stock and keeps the traders in the game for more upside if shares continue to climb. (See our Education section for more on how options can be used to manage risk.)

HBAN fell 0.28 percent to $7.08 yesterday but is up 29 percent so far this year. It's been consolidating above the same price range that was resistance since early 2011. Most chart traders would probably consider that bullish, but they may still fear a drop if the S&P 500 heads lower.

The company is also scheduled to report third-quarter results next Thursday, Oct. 18.

Overall option volume was 6 times greater than average in the name, with puts outnumbering calls by more than 130 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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