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)
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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.

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