W.R. Grace faces downside position

Mike Yamamoto (mike.yamamoto@optionmonster.com)
December 30, 2013

A large trader is positioning for a potential drop in W.R. Grace by the summer.

optionMONSTER's tracking systems detected the sale of 6,291 March 90 puts for the bid price of $2 and the purchase of 5,034 June 90 puts for the ask price of $4.10. Volume was below previous open interest in the nearer-term strike, indicating that a long-put position was closed and rolled forward.

The trader is paying a net $2.10 to maintain the downside position for another three months. The puts could have been bought as a protective hedge on a long position or as an outright bearish bet. Either way, the contracts will expire worthless if the stock remains above $90 through mid-June. (See our Education section)

GRA fell 0.75 percent to $97.37 on Friday after spiking to an all-time high of $101.72 on Dec. 3. Last Monday the company settled the last legal challenge to its plans to exit bankruptcy protection in place for the last 12 years.

Total option volume in Grace topped 11,600 on Friday, 13 times its daily average for the last month. Only 113 calls changed hands, reflecting the session's bearish sentiment.

More From optionMONSTER