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March 14, 2014  Fri 3:16 AM CT

YNDX: SEE CHART GET CHAIN FIND STRATEGIES
Yandex has fallen along with other Russian stocks, but one investor apparently believes that the bottom is in.

optionMONSTER's monitoring programs detected the sale of 4,000 January 30 puts for $4.65 yesterday. That volume was more than 6 times the previous open interest at the strike, which indicates that a new position was initiated.

Selling puts lets traders collect premium in return for insuring other market participants against a drop. That means yesterday's investor is now on the hook to buy shares in the Internet company for $30 if fall below that level by expiration early next year. But above it, the trader keeps the premium while the puts expire worthless. (See our Education section)

YNDX fell 8.42 percent to $29.16 yesterday and is down 30 percent this year. The provider of online content and search in Russia and other Eastern European markets more than doubled in 2013, but it has been skidding lower since January.

Recent tensions between Moscow and Kiev have exacerbated the selling. But yesterday's option trader apparently thinks that the decline has been overdone in a company with a strong earnings track record.

Total volume in the name was just shy of 30,000 contracts yesterday, 5 times its daily average for the last month.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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