Tuesday, November 3, 2009

Black & Decker (BDK) - Nice Trade

As of seven minutes before the close yesterday, everything seemed quite docile in BDK. Average option volume, small stock move, pretty boring really...

Then, six minutes before the close, an opening order came in to sell 200 Jan 2011 55 Straddles @ 18.10 (13.1 in the puts + 5 in the calls). You can see the trade amount, price and time in the Time & Sales snapshot below (click the image to enlarge it).

That's a fairly unusual trade given the expiration date, strike and OI on the puts (15). The 200 puts sold 13x the prior OI. You can see the OI and volume on the Options Tab below (click the image to enlarge it).

Of course, all of the above is pretty trivial... Except that this morning BDK is trading at $58; a takeover. 200 straddles @ $18.1 is a $362,000 credit. Who knows, could be random, or an opening trade in 2011 on a $18 straddle, six minutes before the close in a stock that announces a takeover the next morning is... not luck? Let's just say this... it was a nice trade.

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