How bearish spread is playing Target
Chris McKhann | firstname.lastname@example.org
TGT is up 0.38 percent to $58.27 today after hitting a 52-week intraday high of $59.40 on Monday. Shares were trading down at support at $55 three weeks ago.
A trader sold 4,636 January 45 puts for $1.03 against open interest of 14,520, according to optionMONSTER's systems. At the same time, the investor bought 4,636 October 55 puts for $1.98 at more than twice the open interest, indicating a new opening position.
This diagonal put spread has a definite bearish bias with the purchase of the higher-strike, nearer-term puts. The implied volatility is also in favor of the trader, as the October puts have a rate of 24 percent and the January puts are at 32 percent. (See our Education section)