Options Trading 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.
Share this article with your friends

Related Stories


Can anything stop Home Depot?

November 24, 2015

The home-improvement retail has rallied about 10 percent since a better-than-expected earnings report, with management raising guidance for the second straight quarter.


Put sale sees floor in Home Depot

October 29, 2015

At least one trader is betting that the home-improvement retailer will hold its ground through quarterly results next month.



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 »