) -- At least one investor is calling for longer-term limited downside in

International Paper

(IP) - Get Report

and expressing that bet by selling out-of-the-money puts that expire in 2011.

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The January 20 puts crossed the tape nearly 6,500 times during morning trading versus open interest of 2,500 contracts, indicating investors traded the majority of these puts to open.

We saw one investor sell 6,000 of these options for roughly $2.07, meaning the breakeven on this trade is 17.93. These puts are currently trading down 25 cents with a 20-delta, which means the options are down more than the delta would suggest (the puts should be down just 10 cents).

Normal daily options volume in IP is roughly 5,700, so today's volume is not highly out of the ordinary. But it is interesting that at least one investor boosted put volume today expecting limited downside throughout the long-term.

The other motivation for this trade could be a bet that implied volatility may decline in these options. This sale today computes to an implied volatility of 46 compared to a 63-day realized volatility of 41.

IP shares are currently trading up 53 cents to $26.66, and it looks like put sellers are betting the stock can hold its current level throughout the next year. But remember that put selling such as this is a moderately bullish play because these investors will remain in positive territory even if the stock drops 30% before January 2011 expiration.

-- Written by Jud Pyle in Chicago

At the time of publication, Pyle did not have a positon in the stock mentioned. Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."