Options Trading News

April 17, 2014  Thu 11:07 AM CT

A large trader is looking for a big move up or down in shares of animal-health company Zoetis.

More than 13,000 ZTS options have traded so far today, compared to a full-session average of just 456 contracts in the last month. Almost all of that action was in one print.

optionMONSTER systems show that 12,500 October 25 puts were purchased for the ask price of $0.80 this morning. This is clearly a new position, as open interest in the strike was a mere 21 contracts before the trade appeared.

Just after the puts were bought, the biggest block of stock traded as 262,500 shares were purchased for $28.65. The combination of stock and options creates a delta-neutral play that is looking for higher volatility. The position is very similar to a long straddle, so the trader is betting that the shares will make a big move up or down in by expiration in mid-October. (See our Education section)

ZTS is up 0.4 percent to $28.65 in midday trading. The company, which develops medicines and vaccines for animals, fell to $28.14 yesterday--its lowest price since going public in February 2013. Shares were up near $33 coming into 2014 but have been trending lower since.
Share this article with your friends

Invest Like a Monster - San Antonio: October 9-10

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 »