ERIC – Ericsson Telephone Co. – Bearish transactions dominated trading in Ericsson Telephone Co. options this afternoon despite the upward move in the price of the underlying shares today. Ericsson’s shares gained 1.20% to trade at $10.84 with just over 50 minutes to go before the closing bell ends the trading week in New York. Options investors scooped up roughly 13,200 in-the-money puts at the November $11 strike for an average premium of $0.77 per contract. Traders may be initiating outright bearish bets that ERIC’s shares are set to decline ahead of November expiration. Alternatively, investors may cautiously optimistic, long the stock and buying up put options to serve as downside protection. In an outright bearish scenario, traders are poised to profit should ERIC’s shares fall 5.6% from the current price to breach the effective breakeven price of $10.23 ahead of expiration. More than 17,000 puts changed hands at the November $11 strike versus zero previously existing open interest at that strike.
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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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