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December 4, 2012  Tue 3:16 AM CT

SAP: SEE CHART GET CHAIN FIND STRATEGIES
Business-software giant SAP is back to levels from the dot-com bubble, and one investor is apparently worried about a pullback.

optionMONSTER's Depth Charge tracking program detected the purchase of 3,100 December 80 puts for $2 and the sale of an equal number of December 75 puts for $0.30. Volume was below open interest at the 75s, indicating that an existing position was closed and rolled to the higher strike.

The investor paid $1.70 and is probably using the options to hedge an existing long position in the German-based company. He or she have now raised the level at which they can sell their stock from $75 to $80. (See our Education section)

SAP rose 1.97 percent to $79.53 yesterday. It's up 53 percent so far this year, lifted by several strong earnings reports as new products have helped gain customers. The shares haven't seen their current level since March 2000, shortly before the tech-heavy Nasdaq crashed.

Total option volume was 10 times greater than average in the session, according to the Depth Charge, Puts outnumbered calls by 33 to 1.
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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