Little downside expected in Prudential

optionMONSTER

Traders have no fear of Prudential Financial, even with the stock at its highest level in almost five years.

optionMONSTER's monitoring programs detected the sale of 8,400 August 75 puts, most of which priced for $0.75. Volume was more than 17 times open interest at the strike, indicating that new positions were initiated.

Those put sellers are now on the hook to buy shares in the life-insurance giant if it closes below $75 on expiration. Should the stock remain above that level, they'll keep the premium earned and the contracts will expire worthless. (See our Education section for more on how to turn time into money with options.)

PRU is up 1.05 percent to $79.01 today and up 69 percent in the last year. Money has been flowing into the name as conditions improve in the financial sector and investors are lured by its cheap price relative to book value.

The next earnings report is scheduled for after the closing bell on Aug. 7, so today's trader apparently sees little risk of a big drop. Even if it does decline, he or she is willing to own it for $75.

Total option volume in PRU is 10 times greater than average so far in the session.


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