OptionsHouse

Options Trading News

November 14, 2012  Wed 3:47 AM CT

UAL: SEE CHART GET CHAIN FIND STRATEGIES
One investor thinks United Continental faces a bumpy ride.

optionMONSTER's Depth Charge monitoring program detected the purchase of more than 7,700 January 2015 13 puts for $2.15. This is a new position because there was no open interest at the strike before the trade appeared, and the trade dominated activity in a name that typically sees volume of barely 6,000 contracts.

Those puts are inversely correlated to the price of the airline stock, so they will appreciate in value if it drops and will lose money to the upside. Given that these contracts expire more than two years from now, they are also highly sensitive to perceptions of the company's volatility. (See our Education section)

UAL declined 0.48 percent to $20.94 yesterday. The stock has been attempting to rebound from a sharp drop in July and appears to be hitting resistance at its 200-day moving average. That could make some chart watchers think it will push lower and help explain the downside activity.

Puts outnumbered calls by a bearish 4-to-1 ratio yesterday, according to the Depth Charge.
Share this article with your friends


Related Stories

UAL

Will United Airlines regain altitude?

July 1, 2015

The carrier has fallen more than 21 percent this year as airlines have been hammered on concerns of competitive pressures and volatility in the price of oil.

UAL

What's behind United put buying

June 29, 2015

The carrier hit an all-time high in January but then trended steadily lower along with other airlines until settling into its current range around mid-May.

OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »