Put trading in Eastman Chemical is looking for it to give up its recent gains.
EMN is off fractionally to trade at $44.62 today after the stock saw its the highest close since Aug. 3, when it fell from above $52. Shares have been trending higher hitting a 52-week low of $32.45 in September.
Eastman's option volume has already exceeded 8,000 contracts this morning, about 8 times its daily average. Almost all of the day's action is in one put spread.
A trader bought 4,000 March 40 puts for $1.05 and, at the same time, sold 4,000 March 35 puts for $0.30, according to optionMONSTER's Depth Charge system. The open interest at both strikes had been less than 300, so this is a new bearish vertical spread.
The put spread cost the trader a net $0.75 to open, which is the maximum amount that can be lost, in this case $600,000. The maximum gain comes if EMN is at or below $35 at expiration.
This could be an outright bearish play, looking for the stock to head back toward those lows, or it could be a partial hedge against a pullback.
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