Centerutel Inc., which reports earnings on May 8, is currently trading at 37.20 and saw a customer buy a large block of the May 35 puts.
The trader started paying .35 against 37.19 stock an IV near 28 and paid up to .40 on his or her final 8,000 contracts an IV of 29%.? The net total of contracts bought was just over 12,000.
Ahead of earnings, if one thought the stock was going to drop this might be a strike a trader would go after, however, because of the low relative cost of the put, these also could be a hedge against an existing long.
The strike is now BY FAR the most expensive on the board and would be a great sale against a purchase of the May 37 puts.? A trader could potentially leg into the 37/35/33 butterfly for a relatively inexpensive price of .25