Options Trading News

May 4, 2012  Fri 11:52 AM CT

A trader is betting on limited upside in Avon Products as the cosmetics icon gives up some of its gains from yesterday.

AVP is down 3.19 percent to 20.33 this afternoon. Yesterday it was below $20 before running as high as $22.71 and then closing at $21 even.

optionMONSTER's systems detected the sale of 35,000 July 22 calls, including two prints of 24,700 and 10,000 that traded seconds apart for the bid price of $1.15. The volume was more than 5 times the previous open interest, so this is a new opening position.

This call selling represents a belief that AVP will not return to yesterday's highs. The options were probably traded against long stock as a covered call position, which would be bullish up to the $22 strike price but surrender any upside in the shares beyond that. (See our Education section)
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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.

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