Market News

October 13, 2016  Thu 7:16 AM CT

At least one trader apparently believes that downside potential is limited in Ship Finance.

optionMONSTER's market scanners show that 2,500 February 12.50 puts were sold in one print for $0.65 yesterday. This is clearly a new position, as open interest in the strike was only 900 contracts before the trade occurred.

Short puts lock in a price where investors must buy a stock, while letting them collect premium. Traders use the technique when they like a stock and think the risk of a big drop is limited. (See our Education section.)

SFL fell 0.41 percent to $14.45 yesterday and is down 2 percent in the last three months. The operator of ocean-transport vessels is expected to report earnings in pre-market hours on Nov. 25.

Overall option volume was 6 times greater than average in the name yesterday.

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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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