One investor is using options to guard against a major selloff in real-estate brokerage Realogy.
optionMONSTER's Depth Charge monitoring system detected the purchase of 2,500 December 35 puts for $1.20 and the sale of an equal number of December 60 calls for $0.60 yesterday. Volume was more than 7 times the previous open interest at each strike, indicating that new positions were initiated.
The trade cost $0.60 and ensures that the investor will be able to unload shares for at least $35. At the same time, he or she has agreed to sell the stock for $60 if it rallies above that level. Known as a collar , the strategy is a common hedging technique to protect stock holdings. (See our Education section for other protective strategies.)
RLGY rose 0.76 percent to $44.83 yesterday and is trying to make a higher low around the same price range where it bounced in April and June. Owner of brands including Century 21 and Coldwell Banker, the company went public only last October.
Shares have been struggling in recent weeks despite a strong earnings report on July 24, but there's been bullish call buying since.
Total option volume was triple the daily average in yesterday's session, according to the Depth Charge.
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