There's large put transaction in Red Hat (RHAT - commentary - Cramer's Take) August $22.50 puts, which have traded 3,300 contracts in several large blocks.
Most of the trade was done on the offer price, so it seems to be coming from the purchase side. But prior open interest of 7,518 is sufficient to cover, so this could be someone buying to close a short put position. I'm definitely of the school that unless you are perfectly happy to be assigned stock, it is not wise to try to carry short options that are less than 50 cents into expiration on the hopes of squeezing out those last bit of time decay. It really leaves you trading the clock, and not the stock.
Steven Smith Blog Market Spins Back Around 8/14/2006 5:15 PM EDT Retreat pushes VIX higher, but only so far.
Steven Smith Blog Exhausted Already 8/14/2006 3:37 PM EDT Two old saws aren't tired, though: Monday gaps up are never that bullish, and October's clouded.
Steven Smith Blog Banks Doing Option Business 8/14/2006 12:02 PM EDT The overall put/call ratio popped up Monday, but it is skewed by two large transactions.
Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.
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