What's behind heavy put action in AIG

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Short-term puts dominate today's option activity in American International Group as shares fall again.

Nearly 100,000 AIG options have changed hands today, more than double its daily average in the last month. The big action is in the expiring June 44.50 puts and next week's Weekly 44 puts, with 25,000 trading in each.

The expiring puts have been sold, with 5,280 going for $0.60 and another 6,000 for $0.87 as the stock has tumbled. The volume was below open interest of 11,877.

The trader at the same time bought the same amounts of the Weekly 44 puts for $0.89 up to $1.09, contracts that expire a week from today. The previous open interest in that strike was just 200 contracts before the trade appeared, so the activity is fresh buying.

This could at least partly be a roll from one strike to the next, which would make sense given that the nearer-term options expire at the end of today's session and are in the money. (See our Education section)

AIG is down 2.07 percent this afternoon to $43.35 in afternoon trading, on pace for its lowest close since shares gapped up at the start of May. Shares of the insurance giant were testing resistance and the highs around $46 just last week.


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