How one trader's insuring a position in Aflac
Chris McKhann | email@example.com
AFL rose 0.41 percent to $46.34 in morning trading. The supplemental-insurance company has been rallying since early June, when it bounced at its lows of the year.
Our Depth Charge system shows the purchase of 1,300 February 40 puts for the $1.81 ask price. The same number of February 49 calls was sold at the same time for $2.17. The open interest at both strikes was just above 300 contracts, so this was a new opening position.
The trade takes in a credit of $0.36, which will be kept if AFL remains between the strikes, while above $49 and below $40 they are effectively short the stock. The trade could be an outright bearish play, or this could be a collar around long shares, limiting both losses and potential gains. See our Education Section for more hedging strategies.
Overall option volume in the name isn't huge today, which makes this trade really stand out.