OptionsHouse

Options Trading News

January 14, 2013  Mon 1:16 AM CT

VALE: SEE CHART GET CHAIN FIND STRATEGIES
Vale has been losing ground since starting the year at multi-month highs, but one large trade is betting that the Brazilian metals and mining company will be range-bound.

optionMONSTER systems show that 10,000 March 20 puts were sold for the bid price of $0.84. The previous open interest at the strike had been 5,653, so this is a new position.

A minute later, a block of 440,000 shares was bought for $20.23. Given the delta of the options, this appears to be like a directionally neutral position that is designed to profit if the actual volatility of the shares is less than that implied by the options. (See our Education section)

More than two hours later, 5,000 June 20 puts were bought for the ask price of $1.62. That volume was also more than open interest but looks to be unrelated to the earlier trade.

VALE was down 1.9 percent on Friday, closing the week at $20.32. It was just shy of $22 on the first day of the year, which was its highest price since the start of May 2012.

More than 41,000 VALE contracts traded on Friday, twice its daily option average.
Share this article with your friends


Related Stories

VALE

Heavy call selling bets on ceiling in Vale

May 12, 2016

A large trader apparently believes that upside potential will be limited in the Brazilian mining giant through the end of summer.

VALE

Investor sees Vale higher by end of year

May 12, 2016

Traders are buying December calls in the Brazilian mining giant, which beat earnings estimates in April and is up 84 percent in the last three months.

OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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.

View more education articles »