Options Trading News

July 15, 2014  Tue 10:05 AM CT

Arch Coal is at its lowest level in 14 years, but one trader is betting that shares will hold current levels in the next month.

optionMONSTER systems detected the sale of 3,300 August 3 puts for the bid price of $0.11 in less than 30 seconds this morning. Volume was above the strike's previous open interest of 1,004 contracts, showing that this is a new position.

The put seller is looking for ACI to stay above $3 through expiration in mid-August, but trader would be on the hook to buy shares if they fall below that level. Investors sometimes sell puts this way in hopes of picking up stock at an effective discount on a pullback. (See our Education section)

ACI is down 1.24 percent to $3.19 today and has traded in an extremely tight range for the last week. The coal miner is not far from its low of $3.15 reached on June 4, the worst price since May 2000.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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