Market News

October 19, 2016  Wed 6:45 AM CT

A large trade is positioning for a possible drop in Teck Resources by early next year.

optionMONSTER's monitoring program shows that 8,400 January 17 puts were purchased in one print for $1.14 yesterday. This is clearly a new position, as open interest in the strike was only 491 contracts before the trade occurred.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)

TCK rose 6.17 percent to $20.65 yesterday and is up 45 percent in the last three months.The mining company is scheduled to report earnings before the market opens on Oct. 27.

Overall option volume was 3 times greater than average in the name yesterday.

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Education & Strategy

Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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