Range-bound bet in Home Depot
Chris McKhann | [email protected]
More than 17,000 HD options have traded, topping its daily average for the last month. Most of that action is in the November 76 puts, where a block of 11,000 traded for $0.30.
At essentially the same time, a block of 220,000 HD shares was sold for $77.03. Taken together, the stock and option trades create a delta-neutral position that is short volatility. The trader is therefore looking for HD to remain range-bound and/or for the actual volatility to be less than that implied by those puts through expiration in mid-November. (See our Education section)
HD is down 0.87 percent to $77.21. The home-improvement giant has faced resistance at $78 going back to mid-August. There has been support at $74 since Sept. 10.
The company is scheduled to hold its annual conference for investors and analysts on Dec. 11.