Ivanhoe Mines sees odd put spread
Chris McKhann | firstname.lastname@example.org
IVN is up 10.54 percent to $13, though this gain takes the stock back only to where it was on Friday. The shares, which traded above $18 a month ago, hit a two-year low of $11.75 in yesterday's session.
The total option volume of 11,480 contracts isn't huge for Ivanhoe, but it is about twice its daily average. A trader sold 2,500 May 13 puts for $0.50 and bought the same number of the September 14 puts for $3.15, according to optionMONSTER's Depth Charge system. Each traded on very high bid/ask spreads and was well above the open interest, indicating that this is new activity.
Diagonal put spreads such as this aren't that unusual, but we don't often see them done in the money. This particular example indicates that it a bullish position. (See our Education section)
The trade will take a maximum profit if IVN is right around $13 at that May expiration. But if shares are below that price, the trader will be assigned on the short puts and will be obligated to buy the stock.