Market News

July 9, 2013  Tue 3:47 AM CT

A trader is looking for U.S. Airways to maintain current levels for the next two weeks.

optionMONSTER's tracking systems detected the sale of 3,000 July 17 puts in one print for $0.32. This is clearly a new position, as it was above the strike's open interest of 2,379 contracts before the trade appeared.

The put seller will keep the $0.32 credit as profit if the stock closes above the $17 strike price when the options expire in less than two weeks. If LCC is below that level, he or she will be on the hook to buy shares at an effective price of $16.68 including the credit. (See our Education section)

Investors sometimes use this strategy with the hope or purchasing a stock at a discount. Yesterday's trade follows bullish option activity on June 10.

LCC rose 0.59 percent yesterday to close at $16.94. Shares declined after hitting $19.70 in May, their highest price since December 2007, and have repeatedly faced resistance at the $17 level since early June.

The company is scheduled to hold its annual shareholder meeting on Friday.
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Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

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