At the time of this writing, the Select Sector Materials ETF is trading at 49.35.? Today a customer sold 7500 of the Jan 2015 45 puts collecting 1.22.? The trader is hoping the stock stays above 45 and he or she can collect the premium sold when January expires.? Alternatively if the stock does drop, it appears the trader is willing to purchase the stock for a price of 43.78 if the underlying falls.
This trade should be considered mildly bullish the stock and bearish volatility.? Traders looking to piggy back could look at selling the July 47 contract and then set up a rolling campaign as each option sale rolls off.?