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July 25, 2013  Thu 3:16 AM CT

UPS: SEE CHART GET CHAIN FIND STRATEGIES
A large trade is looking for a floor in shares of United Parcel Service.

optionMONSTER systems detected the sale of 10,000 September 85 puts for the bid price of $1.34. This is clearly a new position, as the strike's open interest was just 456 contracts before the trade appeared.

The put seller will keep the $1.34 credit as profit if UPS holds above $85 through expiration in mid-September. But the trader is taking on the risk of having to buy shares if they are below that strike price. (See our Education section)

UPS finished yesterday at $86.98, down 0.61 percent. The shipping giant has been trending higher since falling below $70 in November, hitting a peak of $91.78 two weeks ago.
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Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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