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.
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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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