OptionsHouse

Options Trading News

November 29, 2013  Fri 10:38 AM CT

MMM: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is looking for a big move in 3M.

optionMONSTER's trade scanners detected the purchase of 8,000 December 130 puts for $0.63 and 8,000 December 135 calls for $1.19. Volume was more than triple the previous open interest at each strike, indicating that new positions were implemented.

The investor paid $1.82 to initiate the trade, known as a strangle. He or she stands to profit from increased volatility, which would drive up the value of the industrial conglomerate's options. Alternatively, they will make money if the shares close below $128.18 or above $136.82 on expiration. (See our Education section)

MMM is up 0.2 percent to $133.77 today. The shares are up 44 percent so far this year, making them the fourth-best performing member of the Dow Jones Industrial Average. It's been climbing amid strong earnings and as an improving economy draws investors to industrial stocks.

Total option volume is slightly above average so far in the session, with that strangle dominating activity.
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Dissecting a big institutional trade

This week's column will study a recent call ratio spread. We're not recommending using this strategy because it has potentially huge risk. But we can learn from this different use of options by a large institutional investor.

View more education articles »