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March 28, 2013  Thu 9:23 AM CT

ENR: SEE CHART GET CHAIN FIND STRATEGIES
A put spread dominates the options trade in Energizer Holdings even as shares continue to set new highs. More than 4,500 ENR options have traded, compared to the daily average of 156 over the last month.

optionMONSTER's Depth Charge tracking program shows a put ratio spread dominating the activity. The trader bought 1,500 May 95 puts for $2.45 and sold 3,000 May 90 puts for the $1.05 bid price. The volume was more than 10 times open interest at both strikes, so this was a new ratio spread.

He or she paid $0.35, which is the risk if shares remain above $95, plus the margin requirement on the extra short puts. The maximum gain comes if shares are down at $90 at the expiration. Gains erode below that level and potentially become losses under $85 because they will be assigned shares at $90 on a drop below that level.

The strategy is often used by investors trying to protect a long position, who'd be willing to buy more on a pullback. See our Education Section for other hedging techniques.

ENR rose 0.87 percent to $98.99 in morning trading. If it holds that price it would be a new closing high since January 2008. Shares have been trending higher since August after bouncing off long term support around $65.

Puts outnumber calls by more 450 to 1 so far today, according to Depth Charge.
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