Star Scientific is trying to stop the slide in its stock price, but a put spread dominates option activity in the name today.
CIGX it up 1.3 percent to $3.83 in morning trading, staying above support at $3.75 that has been in place since late May. The tobacco company hit a 52-week high of $5.05 a month ago.
optionMONSTER's Depth Charge system shows that a trader sold 3,000 August 4 puts for the bid price of $0.40 against open interest of 7,167 contracts while buying 3,000 November 3.50 puts for $0.60. The previous open interest at the latter strike was 597, indicating that this is a new position.
Time decay is accelerating in the August contracts with a little more than two weeks until they expire, so this trade appears to be rolling the long-put position to the later-dated options. The trader is closing the August position and opening a new one in the out-of-the-money November puts. This could be an outright bearish play or a hedge against long shares . (See our Education section)
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