OptionsHouse

Options Trading News

September 22, 2016  Thu 7:16 AM CT

HD: SEE CHART GET CHAIN FIND STRATEGIES

A large trader apparently believes that downside potential is limited in Home Depot.

optionMONSTER's monitoring programs detected the sale of 4,237 October 124 puts in one print for $1.32 yesterday. Open interest in the strike was just 30 contracts before the trade appeared, showing that it is a new position.

Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think that the risk of a big drop is limited. (See our Education section)

HD rose 1.15 percent to $128.29 yesterday but is down 6 percent in the last month. The home-improvement giant reported bullish results on Aug. 16 and is scheduled to release its next earnings numbers in pre-market hours on Nov. 15.

Overall option volume was about average in HD yesterday.

Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »