Blackstone draws cautious trade
Blackstone has been under pressure, and traders are bracing against further downside.
optionMONSTER's Depth Charge monitoring program detected the purchase of 4,500 October 30 puts for $0.79 and the sale of 4,500 October 27 puts for $0.34. Volume was more than 8 times open interest at both strikes, which suggests that a new vertical spread was implemented.
The strategy cost $0.45 and will return 567 percent if the private-equity firm closes at $27 or lower on expiration in mid-October. The long puts lock in the price where investors can sell the stock while the short puts fix the price where they must buy it back. Combining the two allows the traders to profit from a move between two levels. (See our Education section)
BX rose 2.67 percent to $33.48 yesterday but has lost more than 20 percent of its value in the last three months. The stock has been sliding along with the broader market and because of worries about investments in the energy sector.
The next earnings report is estimated for Oct. 15, one day before yesterday's trade expires, so it could be a hedge on a long position heading into the news.
Overall option volume was twice the daily average, with puts dominating the activity.
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