What's behind Hartford put selling
Traders are betting on a floor in shares of Hartford Financial.
optionMONSTER's tracking systems detected the sale of 5,000 Weekly 30 puts expiring on March 6 for $0.02 today. Volume was well above the strike's open interest of 2,316 contracts, indicating that new positions were established.
The traders collect the $0.02 premium from the option sales and are looking for HIG to stay above $30 through expiration at the end of next week. If the stock falls below that strike price, the put sellers will be on the hook to buy shares at that level. (See our Education section)
This type of strategy has a high probability of success but also carries significant risks in a sharp selloff, especially because such trades are often done with large leverage. That is why they have been likened to " picking up nickels in front of a steamroller ."
HIG is unchanged on the session at $40.99 in midday trading. The insurance and financial services company bounced at its 100-day moving average near $39 after reporting earnings at the beginning of this month, but shares have drifted slightly lower in recent weeks.
Today's put selling has pushed total option volume in Hartford above 7,500 contracts, nearly double its full-session average for the last month.
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