Realogy faces cautious position

optionMONSTER

Realogy has been sliding since the year began, and the bears think more downside could be in store.

optionMONSTER's Depth Charge monitoring program detected the purchase of 2,300 February 45 puts for $1 to $1.10. Volume surpassed previous open interest of 2,066 contracts, indicating that new positions were initiated.

The investor now has the right to sell shares in the real-estate brokerage company for $45 through expiration 2-1/2 weeks from now. Puts are used to hedge existing long positions or to speculate on a drop. (See our Education section)

RLGY is up 1.32 percent to $45.97 but is down 7 percent so far in 2014. The stock has fluctuated between about $33 and $55 since going public in late 2012.

Today's put buyer is probably taking a position before the next earnings report. Although management hasn't yet announced the timing, last year's calendar suggests that it will occur in the middle of this month.

Total option volume in Realogy is 5 times greater than average so far today, with puts outnumbering calls by 150 to 1. 

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