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January 25, 2013  Fri 3:16 AM CT

TRI: SEE CHART GET CHAIN FIND STRATEGIES
A large trade is apparently looking to protect gains in Thomson Reuters, which hit a new 52-week high yesterday.

optionMONSTER's Depth Charge system shows that 5,000 TRI February 30 puts traded in a strong buying pattern in less than 9 minutes yesterday, with the largest prints going for $0.45. This is a new position, as open interest in the strike was just 52 contracts before the trading began.

TRI rose 0.65 percent finish yesterday's session at $30.92, its highest close since August 2011. Shares of the business-research and media company have been running higher since bouncing off support at the $27 level last November.

Yesterday's puts, which lock in the price where shares can be sold, wasn't tied to any stock trades identified by our systems during the session. But given how far TRI has run recently, this could well be a hedge to protect gains in an existing long stock position. (See our Education section)

The put buying trade made up almost all of yesterday's total option volume in TRI, which traded nearly 5,400 contracts versus a daily average of just 656. Only 216 calls changed hands in the entire session, a reflection of the day's bearish sentiment.

The trading followed bullish call buying in the name early last week. The company will release fourth-quarter and full-year results on Feb. 13.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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