Bearish Player Enacts Three-Legged Options Combo on Owens Corning (OC)

OC – Owens Corning – Shares of the global producer of glass fiber reinforcements and other materials slipped 2.40% lower to $30.67 this morning, inspiring one options strategist to initiate a three-legged bearish combination play. The investor sold call out-of-the-money call options in order to finance the purchase of a debit put spread in the August contract to prepare for continued erosion in the price of the underlying shares through expiration. The pessimistic player purchased 3,000 puts at the August $30 strike for a premium of $2.00 each, sold 3,000 puts at the lower August $25 strike for a premium of $0.55 apiece, and sold 3,000 calls at the August $32.5 strike for a premium of $1.60 a-pop. The investor responsible for the transaction pockets a net credit of $0.15 per contract, and keeps the full credit received as long as Owens Corning’s shares fail to rally above $32.50 through expiration day in August. Additional profits accumulate for the trader if OC shares decline another 2.2% to breach the effective breakeven price of $30.00. The investor walks away with maximum available profits, including the credit received today, of $5.15 per contract if the price of the underlying stock plummets 18.5% from the current price of $30.67 and trades below $25.00 by August expiration.