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November 7, 2012  Wed 2:14 AM CT

WIN: SEE CHART GET CHAIN FIND STRATEGIES
Windstream has been falling for more than a month, and a large option trade is setting up for another leg down.

WIN fell 0.63 percent to $9.44 yesterday, its lowest close since August. Shares of the broadband technology company traded near resistance at $11 into late September before gapping lower.

More than 18,000 WIN options traded, compared with a daily average of 1,300. Most of the volume was in a large ratio spread, in which a trader bought 5,000 January 9 puts of $0.37 and sold 10,000 January 7.50 puts for $0.09.

This put spread costs the trader $0.19, which will be lost if WIN remains above $9 through expiration. The maximum profit would come if the stock is right around $7.50 at expiration. Below that, the trader is effectively long shares through the additional short puts. (See our Education section)
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Options Academy: Ron's Risk Calculation--A Real Life Example

It is rare that I get a chance to give a real-life, real-time example in my articles that the readers were not only following but were actually involved in at the time the event is happening. Well, that is where we are right now in our QQQ trade from last week. Let's recap the trade itself.

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