Range-bound trade in HD Supply
A trader is looking for shares to remain range-bound in industrial-distribution company HD Supply.
optionMONSTER systems show that 5,300 March 22.50 calls were sold for the bid price of $0.90 on a very wide bid/ask spread. This is clearly a new position, as the previous open interest was 1,551 contracts.
Seconds later a block of 212,000 HDS shares was bought for $19.92. Taken together, the stock and option trades create a delta-neutral strategy that is looking for range-bound trading and/or for actual volatility to be lower than that implied by the options. (See our Education section)
HDS was down 1.73 percent to $19.84 on Friday, its lowest close since mid-July. Shares were above $25 before the company reported earnings in September.
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