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Estee Lauder activity targets key level

David Russell (david.russell@optionmonster.com)

One investor sees resistance on Estee Lauder's chart.

The cosmetics stock peaked just above $120 after a strong earnings report on Nov. 3. Since then it's been drifting lower and is now down another 3.67 percent to $108.40.

optionMONSTER's monitoring programs detected the sale of more than 3,800 January 120 calls against open interest of just 765 contracts. Premiums started at $2.20 but fell to $2.05 as the transactions crossed.

Investors write calls when they think that upside will be limited. The strategy is especially popular when they expect resistance to occur at a certain level on the chart.

Today's transaction obligates the trader to sell shares of EL for $120 if they return to that level by expiration. He or she probably owns the stock and is using the trade to earn income. (See our Education section)

Overall option volume in the name is more than 4 times greater than average so far today.

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