PX – Praxair, Inc. – The industrial gases producer and designer of equipment that produces industrial gases for internal use and external sale popped up on our ‘hot by options volume’ market scanner during the first half of the trading session due to contrarian options activity in the July contract. Praxair’s shares are currently down 1.9% to stand at $77.86 just before 11:50 am (ET). One optimistic individual took a bullish stance on Praxair today despite the decline in the price of the underlying shares by selling short 2,000 puts at the July $75 strike for an average premium of $1.00 per contract. The investor keeps the full premium received on the transaction as long as PX’s shares exceed $75.00 through expiration day in July. The decision to sell the put options implies the trader is willing to have shares of the underlying stock put to him at an effective price of $74.00 should the puts land in-the-money at expiration. Options implied volatility on Praxair is higher by 12.2% to 30.36% as of 11:50 am (ET).
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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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