Learn the trade here. Make it on tradeMONSTER

Options Trading News

March 27, 2013  Wed 9:35 AM CT

M: SEE CHART GET CHAIN FIND STRATEGIES
Macy's continues to pull back down from long-term highs, and option traders are bracing for more downside.

More than 12,000 contracts trade in M already this morning, compared to a total daily average of 3,400. Virtually all of the volume was in the puts. The trade is a complex butterfly spread in the April expiration. A trader bought 2,000 April 41 puts for $0.61 and 4,000 of the April 37s for the $0.08, both going off for their bid prices.

At the same time, they sold 6,000 of the April 39 puts for $0.17 to complete the butterfly spread. This spread is designed to make a maximum profit if M closes at $39 on expiration. Gains will erode below that but they have the 37s as a hedge against too big of a drop. See our Education Section for more on to craft a wide range of strategies with options.

M fell 0.62 percent to $41.73 in morning trading. It hit $42.89 last week, the highest price in three years. Shares were down near support at $36 in mid-January.

Puts outnumber calls by more than 170-to-1 in the retailer so far today.
Share this article with your friends


Premium Services

Education & Strategy

When cash is king (of hedging)

Whether your trades are winning or losing, it can be tempting to add to your positions. But in either case,...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER