Options Trading News

December 11, 2012  Tue 3:47 AM CT

Monster Beverage has regained much of the ground lost when it plunged in October, but yesterday traders were positioning for another leg lower.

More than 3,000 January 50 puts were bought yesterday, with the largest prints going for $1.70, according to optionMONSTER's Depth Charge system. The volume was more than 3 times open interest in the strike at the beginning of the day, indicating that these are new positions.

MNST rose 0.12 percent yesterday to close at $52.84. The company is scheduled to host an investor conference today and will make a presentation that will be webcast live after the market closes.

The energy-drink maker was trading above $58 in mid-October but plummeted to the $40 level amid reports that health authorities were investigating teen-age deaths that could have been linked to such caffeinated beverages. The stock rebounded sharply on Nov. 27 when the Food and Drug Administration suggested that no immediate action was necessary and has been trading in an extremely tight range since then, hugging the $52 level.

Yesterday's put buying was not tied to any stock trades identified by our systems, though it could have been hedging to protect long positions established earlier. They could also be making straight bearish bets that MNST will fall roughly 9 percent by expiration in mid-January. (See our Education section)

Total option volume in the name was more than double its average daily, and puts outnumbered calls by 2 to 1.
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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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