Options Trading News

August 2, 2013  Fri 4:14 AM CT

Intrepid Potash is down big in recent sessions, and traders are worried about further downside.

optionMONSTER's Depth Charge monitoring system detected the purchase of more than 11,000 December 11 puts, most of which priced for $0.80 to $0.95. Volume was more than 90 times the previous open interest at the strike, indicating that new positions were initiated.

These puts ensure a minimum selling price in the fertilizer stock, letting investors protect long positions against drops or speculate on further declines. (See our Education section)

IPI hit an all-time low of $12.04 yesterday, before bouncing and closing up 2.27 percent to $13.07. It cratered 29 percent on Wednesday after Russia's Uralkali withdrew from a potash cartel, threatening to send prices spiraling lower. Other companies in the industry also tanked.

Overall option volume was 16 times greater than average in the session. Puts accounted for a bearish three-quarters of the total.
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The art of trading

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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