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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)
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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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