Shares of Brazilian steel producer Gerdau are retreating from a familiar resistance level, but one trader is positioning for limited downside.
GGB is down fractionally on the day, trading at $9.46. It has again run into resistance at $9.50, as it did in October and July after falling through that level on its way down to support below $7.
Gerdau's option volume already tops 11,000 today, far outpacing its full-day average of 1,700. Almost all of that volume is in one large put trade.
An institutional trader sold 11,000 June 8 puts for the bid price of $0.50, optionMONSTER's systems show. The previous open interest at that strike was 1,889, so this is a new opening position.
The put seller apparently believes that GGB will remain above $8 through expiration, which would allow the trader to keep the credit as profit. Below $8 the trader would still keep the credit but would have to buy the stock. (See our Education section)
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