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TransDigm seen holding altitude

Chris McKhann (chris.mckhann@optionmonster.com)

Aircraft components producer TransDigm fell sharply after reporting earnings last week, but one trader sees an limit to further downside.

optionMONSTER's systems show that a trader sold 3,650 December 120 puts for $2.40 on Friday. The open interest at that strike had been just 66 contracts, so the puts are a new position.

The put selling is a bet that TDG will hold above the $120 strike price through the end of the year, a level that was support through the end of July's lows. The trader is also showing a willingness to buy shares below that level at an effective price of $117.60, including the credit from the put sale.

TDG rose 2.49 percent on Friday to close at $128.78. It was down at $116.61 earlier in the session, its lowest price since mid-April, apparently responding to the disappointing earnings results a day earlier. Shares were at an all-time high above $152 only a month ago.

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