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

Upcoming Webinar:

How to Defend Your Portfolio and Profit in a Market Selloff

http://bit.ly/1OSMWU6

Jon Najarian and Sandy Chaikin of Chaikin Analytics demonstrate how to play defense when the market is selling off. And, how to turn misery into money, whether investing in stocks or trading options.

Education & Strategy

The sweet spot

When using the Stock Replacement Strategy, we must remember that in reality, we are doing a STOCK trade. We are just using options. We are replacing the stock position with an option position (long calls).

View more education articles »