As Vale tries to recover from a steep selloff, huge put selling is betting that current levels will hold in the Brazilian metals and mining company.
optionMONSTER systems show that 38,328 September 12 puts were sold for $0.95 in about 20 minutes yesterday. The volume was well above the strike's previous open interest of 10,392 contracts, indicating that this is a new position.
The put seller is looking for VALE to hold above $12 through expiration in mid-September. The trader takes the risk of having to buy shares if they fall below that strike price. (See our Education section)
VALE rose 2.07 percent to $12.80 yesterday, one session after posting its second-lowest close of the year. Shares were above $14.80 just two weeks ago.
The put selling pushed Vale's total option volume past 72,800 contracts yesterday, more than double its daily average for the last month.
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