Put roll allows leeway to Ascena trade
David Russell | firstname.lastname@example.org
optionMONSTER's tracking systems detected the purchase of 8,000 June 20 puts for $1.20 and the sale of an equal number of September 17 puts for $0.70. That translates into a net cost of $0.50.
Volume was below open interest in the June contracts, which suggests that the investor had previously sold the puts on a hunch that ASNA would remain above $20. But now that the shares are dropping, he or she bought them back and rolled the position to the lower strike.
They now have additional $3 of leeway before they are forced to buy stock but also must wait an additional three months for the trade to play out. (See our Education section)
ASNA fell 2.64 percent to $19.58 yesterday. Formerly known as DressBarn, the company has consistently reported strong results. Its Justice chain, which caters to girls between the ages of seven and 14, has been the strongest brand recently, and now the company is buying plus-size retailer Charming Shoppes.
While yesterday's put trade focused on ASNA, it seems to reflect concern about the broader market as investors worry about the European debt crisis and a potential slowdown in the U.S.
Overall option volume in the stock was 14 times greater than average in the session.