Volatility play in American Realty

Chris McKhann (chris.mckhann@optionmonster.com)
June 11, 2014

The biggest single trade of the day part of a volatility trade in American Realty Capital Property as shares hit 18-month lows.

optionMONSTER systems show that a block of 80,000 January 2016 12.5 calls was bought for he ask price of $1.05 on a wide bid/ask spread. The previous open interest was 1,998, so it was a new position.

Less than 3 minutes later, a single print of 3,840,000 shares was sold for $11.9917. That creates an overall position that is delta-neutral and long volatility , meaning that the trader is looking for a big move higher or lower and/or for actual volatility to be greater than that implied by the option price. (See our Education section)

ARCP fell 1.55 percent to close at $12.10 yesterday after reaching an intraday low of $11.99, both the lowest levels in 18 months. Shares of the commercial real-estate company have traded lower from resistance at $15 in the last three months.


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