How volatility trader is playing Vale
Chris McKhann | [email protected]
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.