Options Trading News

August 3, 2012  Fri 12:20 PM CT

Goodyear Tire & Rubber spiked higher after reporting strong earnings earlier this week, and one trader is betting that the stock will hold current levels.

GT is up 1.29 percent to $11.17 in afternoon trading. Leading up to Tuesday's quarterly results, shares of the tire manufacturer had fallen to support levels under $10 going back at least to last October.

optionMONSTER's systems detected the sale of 23,000 September 11 puts in less than a minute for $0.60. Open interest in the strike was a mere 164 contracts at the beginning of the day, so this is clearly a new position.

The put selling represents a belief that the stock will be above the $11 strike price at expiration in six weeks. If GT is above this level at that time, the trader faces the requirement of buying the shares at an effective price of $10.40. (See our Education section)

The trade accounted for almost all the option activity in Goodyear today, pushing the total volume to nearly 5 times its daily average for the last month.
Share this article with your friends


Premium Services

Education & Strategy

The art of trading

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.

View more education articles »