Options Trading News

August 3, 2012  Fri 3:16 AM CT

As United Rentals struggles to bounce off its lows of the year, one trader is betting on a floor beneath the stock.

optionMONSTER's systems detected the sale of 2,800 January 18 puts for $1.15 in late-afternoon trading. Open interest in the strike was just 119 contracts at the beginning of the day, so this is a new position.

The put seller represents a belief that URI will be above the $18 strike price at expiration, a level not seen since October of last year. If the stock is below that price at that time, the trader faces the possibility of having to buy the stock, but at an effective price of $16.85. (See our Education section)

URI rose 1.04 percent yesterday to close at $28.07, down more than 40 percent from its 52-week high near $48 in late April. The equipment-rental company gapped down from above $34 on July 18 after reporting second-quarter earnings, and stock reached its 2012 lows under $27 late last week.
Share this article with your friends



The fastest money in the market
View full report »

Premium Services

Education & Strategy

The art of trading

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.

View more education articles »