By Chris McKhann
Traders are selling puts and calling a bottom in Dow Chemical (DOW) as it sees some good upside volatility today.
DOW is up 3.11 percent this morning, trading at $26.23. It bounced off a long-term resistance level of $24 on Tuesday and has gapped up the last two days. Shares were up at a 52-week high of $32 at the beginning of May.
The most active strike by far this morning is the July 20 puts. Nearly 7,000 of those puts have already traded against open interest of just 287 contracts. Almost all of these were sold.
One block of 2,416 went for $0.19, while most of the rest of the volume traded over the course of 10 minutes in smaller blocks. This does have the markings of a newsletter recommendation.
This put selling is a bet that shares will not break below $20. DOW last found support at that price in September 2009. If DOW is below that at expiration, the trader will be obligated to buy shares at that strike.
Disclosure: No positions
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