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September 30, 2011  Fri 12:21 PM CT

IP: SEE CHART GET CHAIN FIND STRATEGIES
Traders are selling puts in International Paper for the second day in a row even as the stock takes another leg down.

IP is down another 2.65 percent to $23.51 this afternoon. The paper and packaging company is back near its August lows after recovering and bumping into resistance at the $28 level on two occasions earlier this month.

Leading today's option volume are the January 15 puts, which a trader sold 8,000 times for the bid price of $0.48. This was more than twice the previous open interest, so the trade is opening a new position.

Less than two minutes after those puts were sold, the largest block of IP stock traded as 80,000 shares were sold short for $23.35. Given that the delta of the puts is 0.10, this would hedge the price sensitivity of the position, making it more of a short volatility play as opposed to voicing any view on the direction of the stock.

Overall calls in the name outnumber puts by 8 to 1 so far today. The activity follows the sale of 5,000 January 2013 23 puts a day earlier in an apparent bet that the stock will stay above that $23 strike price.

The company is scheduled to report third-quarter earnings on Oct. 27.
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