Vote of confidence in Dresser-Rand
Chris McKhann | [email protected]
optionMONSTER systems show that 5,000 March 60 puts were sold for $5.80, below the listed bid price at the time. There was no open interest at the strike when the trade occurred, so this is a new position.
The put selling sees a floor for the stock and will keep the $5.80 credit as profit if shares are above $60 through expiration in mid-March. If shares are below that strike price, the trader will face the obligation to buy shares at an effective price of $54.20 when the credit is included. Traders sometimes sell puts in hopes of picking up their underlying stock at a discount this way. (See our Education section)
DRC finished the day at $59.84. The oil-services equipment maker was an all-time high of $67.38 last week.
Total option volume in the name was 6,842 contracts yesterday, compared to a daily average of just 805 in the last month.