How put trade shows caution in Fluor

optionMONSTER

Fluor has been gaining, but one investor remains cautious.

optionMONSTER's Depth Charge tracking system detected the purchase of 2,500 January 57.50 puts for $1.40 and the sale of an equal number of January 55 puts for $0.55. That translates into a cost of $0.85.

The position will expand in value if the construction stock pushes lower, reaching a maximum profit of 355 percent at or below $55. (See our Education section for more on the strategy, known as a vertical spread because it leverages a move between two price points in the same month.)

FLR rose 2.64 percent to $58.74 on Monday and is up 11 percent in the last month. It's been climbing despite a weak earnings report in November, continuing a slow process of making higher lows since early 2009.

Given that the stock is near the top of its recent range, some traders may be expecting a pullback. A put spread would be a common way to hedge against such a drop.

Total option volume was 6 times greater than average in the session, according to the Depth Charge. Puts outnumbered calls by a bearish 14-to-1 ratio.

More From optionMONSTER

View Comments (0)