Options Trading News

October 10, 2011  Mon 9:49 AM CT

Transport stocks are battling higher, and one investor apparently thinks that there's no going back.

optionMONSTER's tracking programs detected put selling in the iShares Trust Dow Jones Transportation Average, which includes names such as Union Pacific and C.H. Robinson Worldwide. More than 2,000 October 80 IYT puts traded for $2 to $2.20 against open interest of 1,511 contracts.

Writing protection is a common strategy when investors like a stock but don't want to spend the capital getting long. It's also popular at this point in the expiration cycle because the value of the puts stands to collapse at an accelerating pace as the options near the end of their lifespan on Oct. 21. (See our Education section)

The IYT is up 2.9 percent to $80.42 in morning trading and has risen almost 7 percent in the last week. It had lost about one-quarter of its value between late July and early October.

Overall option volume in the fund is more than 4 times greater than average so far today.
Share this article with your friends


Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

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.

View more education articles »