Market News

August 29, 2013  Thu 3:47 AM CT

Exterran retreated earlier this month, but one big investor is keeping the faith.

optionMONSTER's monitoring systems detected the sale of 3,100 February 25 puts for $1.25 and $1.30. There was barely any open interest at the strike before the trade appeared, which indicates that a new position was initiated.

Selling puts creates an obligation to buy shares in the event of a pullback while generating premium in the meantime. Such trades usually occur on stocks that traders like and believe will have small risk of a major selloff. (See our Education section for more on the strategy.)

EXH rose 1.69 percent to $27.65 yesterday. The provider of natural gas-compression services roughly tripled between June 2012 and early August, only to fall after announcing a drop in bookings.

Yesterday's put seller apparently thinks the shares are now on solid ground following the pullback. Total option volume in Exterran was 37 times greater than average in yesterday's session.
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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