OptionsHouse

Options Trading News

July 30, 2013  Tue 2:14 AM CT

DRC: SEE CHART GET CHAIN FIND STRATEGIES
A large put sale dominated yesterday's option activity in Dresser-Rand.

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. 
Share this article with your friends


Invest Like a Monster - San Antonio: October 9-10

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »