Volume Spike Investor

It seems that someone is making a majorly aggressive bet against the near-future of Procter & Gamble (NYSE: PG) stock.  Starting last week we noticed a marked increase in both PUT and CALL options in the consumer products giant in the NOV-2008 expiration month.  And the trading volume continues today.  This was actually the most active of options contracts.

It seems that a someone is trading these options conducting a form of arbitrage with the NOV $80 and $95 Strike Puts, and is also using the $80 and $95 Calls as the hedge.

Today alone we have seen over 30,000 of the NOV-08 $95 CALLS and over 20,000 of the NOV-08 $90 PUTS and over 30,000 of the NOV-08 $95 PUTS trade hands.

The options open interest is also massive: over 233,000 of the NOV-08 CALLS and over 316,000 of the NOV-08 $95 CALLS, over 231,000 of the NOV-08 $80 PUTS and over 316,000 of the NOV-08 $95 PUTS.

To show an example of the size of this bet, this 316,000 contacts is representative of some 31.6 million shares.  As of June 30, 2008, there were only 8 holders with larger positions in this stock.

We do not know if someone is speculating that the recent CFO departure is more than meets the eye or if this defensive stock only being down under 15% from its 52-week is the reason.  Either way, this has been a stunning volume trader today and last week in the current month options.

This stock trades an average of about 19 million shares per day.

Jon Ogg

November 3, 2008