What's behind put buying in USG

USG fell sharply yesterday, and traders are positioning for more potential downside in the building-materials company.

More than 5,000 March 29 puts traded in a strong buying pattern, led by a print of 4,787 that went for $1.05, according to optionMONSTER's Depth Charge tracking system. These are new positions, as open interest in the strike was just 690 contracts before the session began.

The puts, which lock in the price where traders can sell shares, were not tied to any stock action identified by our systems yesterday. They could have been bought as a protective hedge on a long position established earlier or as a straight bearish bet that USG will slide further by expiration in mid-March. (See related story on bearish option action in Beazer Homes .)

USG dropped 6.45 percent yesterday to $28.13 along with the rest of the homebuilding sector, as shown on our researchLAB service. The gypsum and wallboard producer had been rising steadily since last August and climbed to $30.97 last Wednesday, its highest price since September 2008.

Total option volume in the name reached 10,624 contracts yesterday, 5.5 times its daily average for the last month. Puts outpaced calls by nearly 3 to 1.


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