One investor isn't afraid of the selloff in Titanium Metals.
optionMONSTER's Heat Seeker monitoring program detected the purchase of about 2,200 December 13 calls for $0.33 and the sale of 1,000 December 9 puts for $0.61. Volume was above open interest in both strikes, indicating that a new position was initiated.
The trader paid about $11,600, or $0.05 per call contract bought. He or she is now highly leveraged to upside in the metal producer, which mainly serves the aerospace industry. The trader also faces potential losses to downside and will be forced to buy shares if they go below $9--a level the stock hasn't seen since late 2009.
TIE fell 2.05 percent to $10.52 yesterday and is down about 30 percent so far this year. Its earnings have mostly been in line with estimates, but the company has struggled against negative sentiment in the materials sector as economic worries sweep Europe and Asia.
Yesterday's bullish strategy appears to be a bet that the stock has fallen too far and will now rebound. Selling puts allowed them to minimize the outlay, giving them low-cost exposure to a rebound if sentiment improves. (See our Education section)
Overall option volume was 5 times greater than average in the session, according to the Heat Seeker.
More From optionMONSTER
America has no tolerance for wealthy people griping about their financial woes. But they have concerns too.