OptionsHouse

Options Trading News

October 24, 2013  Thu 11:17 AM CT

HD: SEE CHART GET CHAIN FIND STRATEGIES
An extremely short-term bet is looking for Home Depot to hold current levels through the end of this week.

optionMONSTER systems show that a trader sold a block of 3,000 Weekly 76 puts that expire tomorrow afternoon for $0.19, below the listed bid price at the time. The volume was more than 10 times the previous open interest, so this was a new opening position.

If today's gains hold up by tomorrow's close, the put seller would get to keep that $0.19 credit as profit. He or she also takes on the risk of having to buy shares if they are below the $76 strike price, but that actually may be part of the plan because some traders use at-the-money short puts to acquire long positions at a discount. (See our Education section)

HD is up 2.09 percent to $76.65 this morning. They were down near $74 at Monday's low.
Share this article with your friends


Related Stories

HD

Trade sees floor in Home Depot

June 25, 2015

The home-improvement retailer initially rose after reporting quarterly results on May 19 but then reversed intraday and fell into a range that has been in place since.

Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »