AA – Alcoa, Inc. – Pessimistic options players piled into October contract put options on the aluminum manufacturer today with shares of the underlying stock trading lower by nearly 1.60% to $10.67 just before 2:30 pm (ET). Bearish individuals bracing for continued share price declines in the next several months purchased approximately 15,000 puts at the October $10 strike for an average premium of $0.90 per contract. Put buyers at this strike price stand ready to accrue profits should Alcoa’s shares decline another 14.7% to slip beneath the average breakeven point on the puts at $9.10 ahead of expiration day. Other bears bought 1,100 puts at the lower October $9.0 strike for an average premium of $0.62 each. Lower-strike put purchasers are prepared to make money if shares of the underlying stock fall approximately 21.50% to breach the average breakeven price of $8.38 by expiration day in October.
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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.
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