Options Trading News

November 29, 2013  Fri 10:38 AM CT

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.
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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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