Options Trading News

July 27, 2012  Fri 2:16 AM CT

Advanced Energy Industries has been dropping, and one bear isn't letting go.

optionMONSTER's Depth Charge monitoring program detected the purchase of 2,000 August 12.50 puts for $1.60 and the sale of an equal number of August 15 puts for $3.70. Volume matched open interest in the 15s, indicating that an existing position was rolled from one strike to the other.

The trader is using in-the-money puts to leverage a decline in the company, whose technology is used for solar panels and electronics. He or she apparently made money on the initial bet and adjusted the strategy to recover $2.10 of cash. The trader also increased leverage because much less capital is now at risk. (See our Education section)

AEIS rose 5.08 percent to $11.58 yesterday. The stock rallied 75 percent between October and early this month but stalled at an old support level from last year and has been falling since.

Overall option volume was 16 times greater than average yesterday, according to the Depth Charge. Puts accounted for almost 80 percent of the total.
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I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

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