Options Trading News

April 9, 2012  Mon 9:27 AM CT

Shares of Kohl's continue to fall with the market selloff this morning, and put trading tops the option action.

KSS is down 1.05 percent today at $49.79 and is now in the middle of its 2012 range. The department-store operator was above $52 on Thursday, which represents resistance going back to November.
More than 3,300 May 47 puts have traded against open interest of 725 contracts, according to optionMONSTER's systems. The puts changed hands on several exchanges for $0.75, which appeared to be the ask price on a tight bid/ask spread.

However, the stock was volatile this morning, and the price action of the options makes it difficult to read the strategy behind them. We also don't see any corresponding action in the underlying shares.

If the puts were bought, they could have been intended either as an outright bearish bet or as a hedge on an existing long position. In either case, we would expect the volatility and price of the puts to increase. So this could also be put selling, as a bet that the stock won't continue to fall in the near term. (See our Education section)
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »