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September 19, 2012  Wed 9:50 AM CT

CBS: SEE CHART GET CHAIN FIND STRATEGIES
CBS has been on a scorching run for years, but one trader is betting on a small pullback by the end of the week.

optionMONSTER's Depth Charge system detected the purchase of 2,000 September 37 puts for $0.41 to $0.47 in 4 minutes this morning. Open interest was 606 contracts at the start of the session, so this is new buying.

CBS is fractionally higher today at $36.62, apparently stalling at resistance around $37 this month. The media company is up more than tenfold since trading near $3 in March 2009 at the height of the financial crisis.

The long puts would turn a profit if the stock falls modestly from today's levels by expiration at Friday's close. The volume isn't huge, but overall puts do outnumber calls in the name by nearly 7 to 1 so far. (See our Education section)
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Sweet Spot Exceptions

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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