Options Trading News

February 5, 2013  Tue 3:16 AM CT

USG has more than doubled in the last year with the recovery in the housing market, but one trader is taking a cautious position before the building-materials company reports fourth-quarter results tomorrow morning.

optionMONSTER's Depth Charge system detected the purchase of 3,500 March 31 puts in less than 2 minutes late yesterday, led by a block of 2,024 that went for $2.60. This is clearly a new position, as open interest in the strike was a mere 12 contracts at the beginning of the session.

USG fell 1.25 percent yesterday to close at $29.21. The gypsum and wallboard producer has been rising steadily since last August, with its 50-day average as support along the way. Shares are up more than 120 percent since dropping near $13 in early June, just pennies from their 52-week low.

Yesterday's in-the-money puts, which lock in the selling price of the stock no matter how far it might fall, could be a hedge to protect a long position that has seen some of USG's big gains. It could also be an outright bearish bet that the stock will fall below $28.40 by expiration in mid-March. (See our Education section)

Yesterday's put purchase pushed total option volume in the name to 5,891 contracts, 4 times its daily average in the last month. Overall puts outpaced calls by nearly 3 to 1.
Share this article with your friends

Related Stories


Why bulls are building into USG

October 1, 2015

Traders are snapping up calls in the wall-board maker, which is down more than 14 percent in the last month but is trying to hold long-term support.

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

Premium Services

Archived Webinar

Education & Strategy

Options Academy: More on the Covered Call Strategy

Last week, we talked about the Covered Call and the misconceptions that surround it. We spoke about how an investor must realize that the Covered Call is actually a premium collection strategy and not so much a directional one. If an investor can grasp this idea, the investor stands to do a heck of a lot better in the strategy than they currently do.

View more education articles »