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What's behind puts in U.S. Airways

Chris McKhann (chris.mckhann@optionmonster.com)

A large put trade tops today's option activity in U.S. Airways with shares near highs.

optionMONSTER systems show that a trader sold 8,000 January 17 puts for the bid price of $0.43 against previous open interest of 24,730. At the same time, he or she bought 8,000 February 21 puts for $1.86 in volume far above that strike's open interest of just 205, clearly indicating a new position.

This could be a new opening diagonal spread , with the trader using the sale of the nearer-term lower-strike puts to offset some of the cost of the longer-term contracts. Alternatively, the trader could be rolling the puts out in time but moving it closer to the stock price to get a more sensitive position. (See our Education section)

LCC is off fractionally to $22.32 this morning. The airline carrier posted a closing high of $22.67 last week after trending higher from $16 in the last two months.

More than 22,000 LCC options have changed hands, compared to the daily average around 14,000. Most of the action is in today's put trade.

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