Options Trading News

May 9, 2014  Fri 10:32 AM CT

Monster Beverage is facing a downside position after reporting earnings yesterday.

optionMONSTER's Depth Charge system has detected the purchase of 2,700 June 65 puts for $2.25 to $2.35 in less than 2 minutes this morning. Open interest was just 772 contracts before the trade appeared, indicating that this is a new position.

These puts lock in the price where MNST shares can be sold no matter how far they might fall. The trader could be using them to hedge a long position or to make an outright bearish bet, but either way they will expire worthless if the stock remains above $65 through mid-June. (See our Education section)

MNST is down 1.01 percent to $65.45 after beating earnings expectations but missing revenue forecasts in its quarterly report yesterday afternoon. The beverage company had been trending lower since hitting a two-year high of $75.63 in late February but bounced near its 200-day moving average a month ago and has been trading in an increasingly tight range since.

Total option volume in the name already tops 6,300 contracts, more than triple its full-session average for the last month. Overall puts outnumber calls by more than 2 to 1 in the session so far.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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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