Options Trading News

July 30, 2013  Tue 2:14 AM CT

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. 
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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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