Why one trader is buying USG puts
Mike Yamamoto | [email protected]
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.