Options Trading News

April 16, 2013  Tue 3:16 AM CT

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


Premium Services

Archived Webinar

Education & Strategy

The covered call and unhedged risk

I have written a few things on the Covered Call Strategy over the last two weeks. Please understand that those two previous articles plus this one do not constitute a proper, fully in-depth lesson on the Covered Call Strategy like we have in our classes at Option Monster Education. I have picked out a few topics that I believe were worth noting and today I am going to add the final one.

View more education articles »