Options Trading News

February 21, 2014  Fri 11:06 AM CT

A large put trade in American Capital is part of a volatility strategy as shares continue to climb.

optionMONSTER Depth Charge system shows that a trader bought 10,000 August 12 puts for the ask price $0.22. There was no previous open interest at that strike, so this is a new position.

Less than 2 minutes later a block of 100,000 shares traded for $16.06. So the overall strategy is apparently a delta-neutral play that is looking for higher volatility than that implied by the option price. (See our Education section)

ACAS is up 2.53 percent to $16.19 in midday trading, its highest level since hitting a 52-week high of $16.28 a month ago. The private-equity firm dipped as low as $14 after releasing earnings results two weeks ago.

More than 21,000 ACAS options have traded so far today, 5 times its daily average for the last month.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. 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.

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