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Protection bought in American Axle

Mike Yamamoto (mike.yamamoto@optionmonster.com)

American Axle & Manufacturing soared more than 33 percent in May alone, and one trader apparently moved to lock in those gains on Friday.

optionMONSTER's Depth Charge system shows that 2,057 June 18 puts were bought for $0.60 when AXL was trading above $18. The data indicates that this is the work of one trader opening a new position in volume that was well above the the strike's existing open interest of 816 contracts.

The puts, which lock in the price where the stock can be sold no matter how far it might fall, weren't tied to any stock activity identified by our systems on Friday. But because shares had run so high, an investor was likely buying the puts to protect a long position established at an earlier time. (See our Education section)

AXL fell 2.25 percent to $17.79 on Friday after hitting $18.48 one session earlier, its highest price since June 2008. The company, which makes car drivetrains, bounced off support at $12 in mid-April and has been racing higher ever since, boosted by better-than-expected revenues reported on May 3.

Total option volume in then name topped 4,600 contracts, 6 times higher than its daily average for the last month. Puts outpaced calls by about 1.7 to 1.

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