Market News

October 18, 2016  Tue 9:33 AM CT

Corrections Corporation Of America is facing a downside position.

optionMONSTER's monitoring program shows that 3,000 March 12 puts were purchased in one print for $1.35 and $1.40 yesterday. This is clearly a new position, as open interest in the strike was just 143 contracts before the trade occurred.

Long puts lock in the price where a stock can be sold, so they make money if shares decline. Investors use them to hedge long positions or to speculate on a drop. (See our Education section)

CXW is up 6.27 percent to $15.25 in morning trading but is down 56 percent in the last three months. The prison operator is expected to report earnings after the close on Nov. 2.

Overall option volume is about average in CXW so far today, but puts outnumber calls by a bearish 4-to-1 ratio.

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Four-Part Edition: Cash-Secured Puts, Covered Calls, Stock Replacement Calls, and Protective Puts

We are finishing this year's editions of Advantage Point Newsletters with a "best of" review of the simple options strategies that should be the basic foundation for any investor.

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