Market News

September 28, 2012  Fri 9:45 AM CT

As Hewlett-Packard hovers just above eight-year lows, a large trader is anticipating a big move in either direction.

HPQ is down 0.55 percent at $17.13 this morning. The struggling PC maker closed Tuesday at $16.71 and touched $16.23 on Wednesday, its lowest levels since August 2004. Shares have fallen from the 52-week high of $30 set in February.

A trader bought 10,000 May 14 puts for the ask price of $0.83, according to optionMONSTER's Depth Charge system. Open interest was a mere 2 contracts at the start of the session, so this is a new position.

There were also some large stock blocks traded in HPQ this morning, including a block of 220,000 shares bought for $17.27 just two minutes after the puts traded. The total delta of the put position is -220,000, so that stock transaction would make the overall position directionally neutral.

This means that the trader is setting up a long volatility play that could profit if HPQ moves sharply higher or lower and/or if the volatility is more than that implied by the options. (See our Education section)
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