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Navistar attracts 3-way spread

Chris McKhann (chris.mckhann@optionmonster.com)

As Navistar shares fell back toward their lows on Friday, a three-way trade topped the truck manufacturer's option activity.

A trader bought 7,000 November 20 calls for $0.05 against open interest of more than 24,000, according to optionMONSTER's tracking systems. At the same time, he or she sold 7,000 December 18 calls for $2.55 and bought 7,000 December 15 puts for $0.45. The volumes at both of those strikes were more than open interest.

NAV lost 1.8 percent on Friday to finish the session at $19.41, its lowest close since the end of October. The stock had traded up to $21 earlier last week as it climbed from a four-year low of $18.17. Shares were above $48 back in February.

The trader was apparently rolling out of the expiring November short calls and into a collar in December. This was very likely done against a long stock position and is designed to protect against a further pullback. (See our Education section)

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