Market News

December 28, 2012  Fri 10:00 AM CT

One investor appears to be playing it safe in Home Depot.

optionMONSTER's Depth Charge tracking system detected the purchase of about 3,700 January 60 puts for $0.67 and the sale of a similar number of January 62.50 calls for $0.15. Volume was more than 11 times the previous open interest at each strike and therefore new positioning.

The trade cost $0.52 and will make money if HD falls below $60, but it will force the investor to sell shares if they go over $62.50. He or she probably owns the home-improvement stock and is using the options for protection in a position known as a collar.

HD fell 0.26 percent to $60.91 in morning trading. It's up more than 40 percent this year, making it the second-best performer in the Dow Jones Industrial Average amid better sentiment in the housing market.

Total option volume is twice the daily average so far in the session, according to the Depth Charge.
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