Put buyers are looking to bury Tronox
David Russell | email@example.com
optionMONSTER's Depth Charge tracking program detected the purchase of about 5,000 February 17.50 puts, most of which priced for $0.40 to $0.50. Volume was more than 25 times previous open interest at the strike.
Those contracts lock in the price where investors can sell shares in the producer of titanium ore and oxides. Given their relatively low cost, they can generate significant leverage if the stock pushes lower over the next five weeks, but will also expire worthless if the decline doesn't take place.
TROX is down 5.92 percent to $19.70 in afternoon trading. It peaked at $38 last spring, then proceeded to lose almost two-thirds of its value by late last year. The last earnings report in November missed expectations by a wide margin.
The stock has been rebounding since then but is now hitting resistance around $21. That level was support in July and is currently the location of its 100-day moving average, which could be leading some chart watchers to expect the longer-term bearish momentum to return.
Total option volume is 15 times greater than average in TROX so far today, according to the Depth Charge. Puts outnumber calls by 25 to 1.