OptionsHouse

Options Trading News

November 14, 2012  Wed 1:47 AM CT

ORLY: SEE CHART GET CHAIN FIND STRATEGIES
Shares of O'Reilly Automotive have lost about 17 percent in the last six months, but traders are betting that the car-parts retailer will hold above support through early next year.

optionMONSTER's tracking systems detected the sale of more than 2,500 February 80 puts yesterday, mostly for $1.95 and $2. The volume was 12 times the strike's open interest of just 205 contracts at the start of the session, clearly indicating new positions.

ORLY rose 1.61 percent to close at $89.61 yesterday, well below their 52-week high above $107 reached in early May. Shares of the auto-parts retailer have risen sharply since bouncing off the $80 level in mid-October and gapped higher after its last earnings report a few days later, but they have been trapped at resistance just below their 200-day moving average this month.

Yesterday's put sellers apparently believe that ORLY will close above the $80 strike price at expiration in mid-February. Below that level, the traders face the obligation to buy the shares at an effective price of about $78 once the credit from the put sale is factored in. (See our Education section)
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Timing the Trade

Both break outs and a break downs need to have a couple things happen before it is considered a confirmed break out or break down by technical definition!  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 »