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Options Trading News

August 7, 2012  Tue 11:46 AM CT

DOW: SEE CHART GET CHAIN FIND STRATEGIES
As Dow Chemical rallies off its lows, a large trade is betting on a floor beneath the shares.

DOW is up 0.87 percent to trade at $30.25, a week after hitting its 2012 low of $28.65. Shares have been trending lower from their 52-week high of $36.08 set in late April.

A trader sold 5,000 March 28 puts for the bid price of $2.08, according to optionMONSTER's systems. Open interest at the beginning of the day was just 358 contracts, so this is a new position.

The put seller apparently believes that thes stock will hold above $28 through expiration. The trader is looking to collect the so-called volatility premium but does face the possibility of having to buy the stock if its trades below that level. (See our Education section)
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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