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????????????????????????????????????????????????? Serious Hedging Activity In AA
Alcoa (AA – currently trading $7.54 down $.27 with an IV30 of 57.75 and an HV10 of 75.64) saw some heavy put action today in the LEAPS. The stock with an ADV of 53,000 and OI of 1.1 million option contracts saw a trader buy in 2 blocks of the Jan 2017 5 puts tied up to stock. The trader bought 5,000 of the January 2017 5 puts for $.44 and then another 10,000 of the 5 puts for $.47. The stock tie appears to be around $7.60 a share.
This trade is likely a hedge against a further long position.? The trader while long the stock wants to make sure that he or she does not lose all dollars invested.? Additionally the long position could be debt related.? It?s not uncommon to see bond holders carry long puts in equity as a hedge against default risk in the company. This trade should be considered bearish AA and bullish volatility in AA.