Market News

November 27, 2012  Tue 11:05 AM CT

BMC Software has been asleep for a while, and one investor apparently thinks that it will remain dormant.

optionMONSTER's tracking programs detected the sale of 5,550 February 39 puts for $1.40 and 5,550 February 41 calls for $1.80. Volume was more than 5 times open interest at both strikes.

The trader collected a credit of $3.20, which he or she will keep as profit if the shares remain between the strike prices on expiration. Gains will erode outside that range, turning to losses below $35.80 and above $44.20.

Known as a short strangle, the position makes money from time decay erasing the value of the options sold short. (See our Education section for other market-neutral strategies.)

BMC, which is up 1.64 percent to $40.92 in early afternoon trading, has been moving sideways since February. During that time, the maker of enterprise software has mostly stayed between $36 and $44. Today's short strangle is looking for that range to remain in effect.

Total option volume is 16 times greater than average so far in the session.
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