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April 23, 2013  Tue 9:49 AM CT

VMC: SEE CHART GET CHAIN FIND STRATEGIES
A large trader is looking for lower volatility in Vulcan Materials as its shares bounce today.

More than 5,000 VMC options have changed hands so far today, compared with a daily average of just 150 in the last month. All but 25 of the contracts are in a single trade in the concrete and cement maker.

optionMONSTER systems show that a trader sold two blocks of 2,500 August 45 puts at the same second for $2.30 and $2.25. This is clearly a new position, as the open interest in the strike was just 174 contracts before the session began.

Less than a minute later, a block of 180,000 VMC shares was sold for $47.20 in a trade that represents more than 70 percent of the day's total stock volume in the name. The combination of these shares and the short puts creates an overall position that is delta-neutral and aimed at lower volatility.

The trader is therefore looking for VMC to stay range-bound near $45 through expiration in mid-August and/or for its actual volatility to be less than that implied by the options. (See our Education section)

VMC is up 1.16 percent this morning to $47.21. It bounced off support at $45, which has been a significant level going back to mid-September. Shares did climb above $59 at the January highs.
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Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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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