What's behind Nordstrom put action
David Russell | email@example.com
optionMONSTER's Depth Charge monitoring system detected the purchase of about 1,200 March 55 puts for $1.68 and the sale of a matching number of March 57.50 puts for $0.97. Volume was more than twice open interest at both strikes.
The trader probably owns shares in the Seattle-based retailer and is using the options as a hedge in a collar strategy. He or she is has locked in a minimum selling price of $55 and a maximum of $57.50. It cost $0.71 to open, so the effective sale price would be $55.71 to $58.21. (See our Education section)
JWN fell 0.16 percent to $55.59 yesterday. It rallied about 400 percent between early 2009 and the second half of last year but then stalled around the same $60 level where it peaked in early 2007. That could be leading some chart watchers to believe that it's at resistance and will push lower.
The next scheduled events that could serve as potential catalysts are the release of same-store sales on Feb. 7 and quarterly results on Feb. 21.
Total option volume was triple the daily average in Wednesday's session, according to the Depth Charge.