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

Home Depot put selling bets on floor

February 10, 2016

The home-improvement retailer has dropped more than 11 percent just in the last week, but traders apparently believe that further declines will be limited.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »