OptionsHouse

Options Trading News

January 17, 2013  Thu 3:47 AM CT

SID: SEE CHART GET CHAIN FIND STRATEGIES
Companhia Siderurgica Nacional fell yesterday, but one trader believes that the Brazilian steel maker will hold above a key level this year.

optionMONSTER systems show that 11,418 SID options changed hands yesterday, compared to a daily average of just 1,000, led by the sale of 4,000 January 2014 5 puts for $0.65. The trade's volume was twice the previous open interest at that strike, clearly indicating a new position.

This put selling is a bet that SID will remain above the $5 strike price by expiration in a year. The trader would also face the obligation to buy shares if they are above that level at that time, but at an effective price of $4.35 when the credit from the put sale is factored in.

SID declined 3.26 yesterday to close at $5.94, just below its 200-day moving average. The shares were above $10 last February but traded below $5 through November.
Share this article with your friends


Invest Like a Monster - San Diego: June 26-27

Premium Services

Education & Strategy

Introduction to Synthetics

"Synthetics" is the name given to the relationship of two separate positions, constructed differently, that have the same exact risk and reward at each and every price level. They say that there is more than one way to skin a cat...well, there is always more than one way to create an option position...

View more education articles »