IRM – Iron Mountain, Inc. – Shares of the global provider of information management and related services for all media increased as much as 1.925% during morning trading to touch an intraday high of $20.64. Iron Mountain made its way onto our scanners due to bullish options activity in the September and October contracts. Plain-vanilla call buying ensued at the October $22.5 strike where traders picked up approximately 2,700 calls for an average premium of $0.15 apiece. Investors long the calls make money if Iron Mountain’s shares surge 9.7% to exceed the average breakeven price of $22.65 by October expiration. Back on August 24, 2010, when IRM shares were trading around $21.41, one optimistic player bet the price of the underlying stock would not trade below $20.00 by September expiration. The investor did this by selling 12,000 puts at the September $20 strike for premium of $0.25 per contract. In the six days following the transaction, Iron Mountain’s shares slid 6.2%, but never traded below $20.09 since the puts were sold. Today the investor bought back the puts for just $0.10 per contract to pocket net profits of $0.15 per contract. Perhaps hoping to garner additional profits from the same strategy, the trader once again sold 12,000 puts, this time at the October $20 strike, to take in premium of $0.50 per contract. If the stock happens to trade below $20.00 by October expiration, the investor is obliged to have shares put to him at an effective price of $19.50 each. The overall reading of options implied volatility on Iron Mountain is up 7.8% at 32.19% as of 1:00 pm ET.
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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