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Home Depot gets vote of confidence

Chris McKhann (chris.mckhann@optionmonster.com)

As Home Depot remains near its highs, one trader is counting on stock holding current levels in the next month.

A trader bought 7,961 November 60 puts for the ask price of $0.51 against previous open interest of more than 24,000 contracts, according to optionMONSTER's systems. At the same time, he or she sold 7,961 December 57.50 puts for $0.74, below the listed bid price, against open interest at that strike of 1,779, so that was a new position.

This could be a short diagonal spread, it is much more likely that it is a roll of a short put position. The trader would therefore be buying back the short puts in November that only have a few days left until expiration and opening a new position at the lower strike in December. That suggests the trader sees the $57.50 level holding through expiration on Dec. 21. (See our Education section)

HD is off 0.5 percent to $60.66, not far from its all-time high of $63.20 reached a month ago. Shares of the home-improvement retailer have been range-bound since then but mostly holding above $60.

Total option volume in the name is 3 times its daily average.

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