DELL – Dell, Inc. – The just-in-time manufacturer of personal computers attracted bearish options players during the session with shares of the underlying stock edging 0.60% lower to $13.04 by 12:15 pm ET. Pessimists picked up 1,100 puts at the August $13 strike for an average premium of $0.35 apiece. Investors buying the puts outright make money if Dell’s shares fall another 3.00% to breach the average breakeven point to the downside at $12.65 by August expiration. Bearish sentiment spread to the September contract where traders were seen selling in- and out-of-the-money call options. It looks like some 3,200 calls were sold at the September $13 strike for an average premium of $0.60 each. Investors may be throwing in the towel on previously established long call positions, or could be engaging in outright call selling. Traders selling the calls outright walk away with the full $0.60 premium in hand as long as the price of the underlying stock is less than $13.00 at expiration. More pessimistic individuals expecting shares to decline significantly by expiration day next month sold approximately 3,900 in-the-money calls at the September $12 strike for premium of $1.29 per contract. There are only 360 lots of open interest at that strike, which indicates today’s volume is all new activity. In-the-money call sellers keep the full $1.20 premium received today only if Dell’s shares fall 8.00% from the current price of $13.04 to trade below $12.00 by September expiration.
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.
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