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March 3, 2014  Mon 10:56 AM CT

HD: SEE CHART GET CHAIN FIND STRATEGIES
Home Depot fell today, but traders apparently think that the home-improvement stock will hold its ground.

optionMONSTER's tracking systems show more than 7,500 of the April 79 puts have traded against open interest of just 60 contracts. The big block of 5,802 was sold for the bid price of $0.91.

The put seller is wagering the stock will remain above $79 through that April expiration. They take the risk of having to buy shares if they are below that strike and will keep the $0.91 premium as profit if remains above it. (See our Education section)

HD fell 0.79 percent to $81.38 in late morning trading. Shares hit an all-time intraday high of $83.10 on Friday, and are up from under $74 early last month.
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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.

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