OptionsHouse

Options Trading News

October 16, 2012  Tue 2:14 AM CT

VLO: SEE CHART GET CHAIN FIND STRATEGIES
One investor wants to take the money and run in Valero Energy.

optionMONSTER's Depth Charge tracking system detected the purchase of 3,600 December 22 puts for $0.24 and the sale of an equal number of December 26 calls for $3.05. Volume was more than 4 times open interest at each strike, and the trader collected a credit of $2.81.

He or she probably owns shares in the oil refiner, and this strategy will let them manage an exit from the position. Writing the calls locks in an exit price of $26 while the puts ensure a minimum selling price of $22. (See our Education section)

Including the credit earned, the maximum sale price would be $28.81 and the minimum sale price would be $24.81. If the stock closes between the strike prices on expiration, the trader will keep the shares and pocket the $2.81.

VLO fell 0.69 percent to $28.81 yesterday. It rallied about 60 percent between early June and early September but has been drifting lower since. Total option volume in the name was more than twice average amounts in the session, according to the Depth Charge.
Share this article with your friends


Related Stories

VLO

How the bears are targeting Valero

March 3, 2015

The company has done well along with other refiners, but yesterday the bears racked up some fast money as selling pressure hit the broader energy sector.

Invest Like a Monster - Las Vegas: March 13-14

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Webinar Recording

Turbo Charge Your Trading Profits

Education & Strategy

Gamma

As we continue to discuss the Greeks, we come to the first of the strike based Greeks called Gamma. Gamma is known as the second derivative, while delta is the first.

View more education articles »