GNW – Genworth Financial Corp. – One options investor utilized a total of 60,000 put options on Genworth Financial Corp. in the first half of the trading day perhaps to reduce the cost of locking in the 3.30% rebound in the insurance company’s shares to $15.41. It looks like the put player sold 40,000 puts at the September $10 strike for an average premium of $0.445 apiece in order to purchase 20,000 near-term put options at the June $15 strike for an average premium of $0.77 each. The transaction yields a net credit of $0.12 per contract to the investor, who keeps the full credit received as long as GNW’s share price exceeds $10.00 through September expiration. The short sale of the September $10 strike puts suggests the trader does not expect Genworth’s shares to plummet 35% in the next several months to expiration. However, the long stance in June $15 strike puts indicates perhaps the price of shares of the underlying stock may contract in the near-term, ahead of June expiration. The long put position provides downside protection in case Genworth’s shares slip beneath $15.00 ahead of expiration day.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers