Options Trading News

November 12, 2013  Tue 3:47 AM CT

Aeropostale is trying to rebound, but one big investor has protection in place.

optionMONSTER's Depth Charge monitoring system detected the purchase of 7,000 December 9 puts for $0.85 and the sale of an equal number of November 9 puts for $0.20. Volume was below open interest in the shorter-dated contracts, which indicates that an existing position was closed and rolled forward in time.

Puts lock in the price where the retailer can be sold, so they move in the opposite direction as the shares. The instruments are used to insure an investment in the stock against a pullback or to speculate on a selloff.

Adjusting the position cost $0.65 and lets him or her avoid the accelerating pace of time decay that will occur in the November contracts through expiration on Friday. (See our Education section)

ARO rose 3.09 percent to $9.02 yesterday. It has lost more than 40 percent of its value in the last six months and has been trying to climb after hitting its lowest levels since early 2004.

Total option volume was triple the daily average, according to Depth Charge. Puts outnumbered calls by a bearish 9-to-1 ratio.
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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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