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December 24, 2012  Mon 2:45 AM CT

MCK: SEE CHART GET CHAIN FIND STRATEGIES
McKesson hit an all-time high last week, and now one trader is expecting a sharp move up or down by pharmaceutical-service company.

optionMONSTER systems show that 2,000 May 92.50 puts were bought for the ask price of $2.70 on Friday. This is clearly a new position, as open interest in the strike was just 95 contracts at the beginning of the day. The delta of the options was -0.31, so the total delta of the position is -62,000.

One minute after the puts were bought, 62,000 MCK shares were bought for $97.8807. That would make the position delta-neutral, a long-volatility trade that would profit from a big stock move in either direction. (See our Education section)

MCK finished Friday at $98 even, down 1 percent on the day but up fractionally for the week. Shares have been running higher from support at $86 in the last three months and chalked up a lifetime high of $100 on Tuesday.
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Market Level Making You Nervous, Huh? Part 3

In last week's article, we discussed how important the extra cash you save by using the Stock Replacement Strategy over buying the actual stock is! That extra cash in our account instead of being unnecessarily tied up in a stock position allows us to buy the puts we would need to protect our downside in the case of a major sell-off.

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