Put buying dominates action in Trinity


Trinity Industries is trying to recover from a steep drop with the rest of the market Tuesday, but one trader is positioning for another leg down.

More than 2,000 April 31 puts were bought for $0.85 and $0.90, according to optionMONSTER's Depth Charge system. Open interest at the strike was just 103 contracts at the beginning of the session, so this is new buying.

TRN is up 1 to $33.34 this afternoon after gapping lower on Tuesday, when it lost all of its gains from February. The industrial manufacturer beat fourth-quarter earnings and revenue estimates last month and gave strong guidance for the current quarter and the rest of this year.

Our systems did not identify any stock trades tied to today's put buying, though it could have been done as a protective hedge on an existing long position. If not, the trader is making a straight bearish bet that the stock will drop roughly 10 percent by expiration in six weeks. (See our Education section)

Today's activity in TRN has pushed its total option volume to more than 13 times its full-session average. Overall puts outnumber calls by more than 71 to 1, a reflection of the day's bearish sentiment.

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