Trader looks for sharp move in Allstate


Allstate is trading at its highest level in four years, and one big option trade appears to be looking for a big move up or down.

ALL is up fractionally at $40.99 in midday trading after hitting $41.25 earlier in the session, its highest price since October 2008. The insurance company was at a 52-week low of $24.10 a year ago.

The main option activity in the name today involves 2,100 each of the April 41 calls and puts. The puts were bought in one print for the ask price of $2.43 while the calls were purchased in two blocks of 1,050 for $2.24 and $2.25, according to optionMONSTER's systems.

The trade appears to be a long straddle , which is designed to profit from a sharp move in either direction or from actual volatility that is greater than that implied by the options. (See our Education section)

The implied volatility of the options is 19.6 percent. The 30-day historical volatility for ALL is 12.2 percent, a 52-week low and down from 25 percent a month ago.

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