OptionsHouse

Options Trading News

April 16, 2013  Tue 3:16 AM CT

MCK: SEE CHART GET CHAIN FIND STRATEGIES
McKesson fell with the rest of the market yesterday, but one investor sees little risk of a major drop.

optionMONSTER's tracking programs detected the sale of 7,500 August 100 puts for $2.80. Volume was almost 7 times previous open interest at the strike.

The trader is now obligated to buy shares in the pharmacy-benefits company for $100 if they're below that level on expiration this summer. Including the credit earned, the cost basis would be $97.20. If it remains above $100, the puts will expire worthless, and he or she will keep the $2.80. (See our Education section for more on short puts.)

MCK fell 1.02 percent to $107.25 yesterday but is up 18 percent in the last six months. It's been trending steadily higher for years and hit an all-time high above $110 last month.

Total option volume was 10 times greater than average in the session.

Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

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.

View more education articles »