By David Russell of OptionMonster
NEW YORK -- USG's (USG) been standing stall, and the bears want to knock it down a peg.
OptionMonster's tracking programs detected the purchase of more than 4,500 February 32 puts in the building-products company on Friday, most of which priced for $1.90 and $2. The volume was 13 times higher than the strike's previous open interest, indicating that new positions were initiated.
Puts lock in the price where a stock can be sold no matter how far it might fall, creating an inverse relationship to their underlying share price. Investors often use them to hedge long positions, but the fact that Friday's contracts were in the money suggests that this trade is a speculative bearish play.
USG shares fell 4.49% to $30.62 on Friday. The stock touched $32.39 on Jan. 17, its highest price since the broader market was on the verge of collapse in September 2008. The company's next earnings report is scheduled for the morning of Feb. 6, about two weeks before Friday's puts expire.
Total option volume was triple the daily average in the session, with puts outnumbering calls by almost 8 to 1.
Russell has no positions in USG.