Bears refuse to let go of Navistar

optionMONSTER

Navistar shares are crumbling today, and one investor apparently thinks that the selling could intensify.

optionMONSTER's Depth Charge monitoring program detected a large bearish trade in the truck maker, which has been struggling to develop low-emission engines. Some 14,000 October 20 puts were sold for $0.25 against previous open interest. Equal-sized blocks traded in the November 18 calls, sold for $2.45, and the November 16 puts, bought for $0.35.

Volume exceeded open interest in the Novembers, so it appears that the investor closed a bearish position in October and rolled it forward by one month. He or she collected a credit of $2.35 in the process and stand to profit from NAV pushing lower. (See our discussion of collars )

The trader may own shares and could be using the options to hedge their position. If that's the case, he or she must now sell for $18 if the stock closes above that level on Nov. 16 but has ensured a minimum exit price of $16. They would make more than that including today's credit, but we don't know their cost basis from the earlier trade.

NAV is down 7.3 percent to $19.04 in early afternoon trading and has lost more than half its value since February. The stock has spent the last four months trying to hold support around $20, its lowest price since the start of 2009.

Today's bearish trade pushed total option volume to 9 times greater than average so far today, according to the Depth Charge.

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