Estee Lauder is near the top of its recent trading range, and one investor apparently believes that it is heading back down to support.
optionMONSTER’s Depth Charge monitoring program detected the purchase of 2,500 September 55 puts for $2.61. Equal-sized blocks were sold at the same time in the September 52.50 puts for $1.58 and the September 50 puts for $0.93. Volume was more than quadruple open interest at all three strikes.
Known as a bearish Christmas tree, the strategy is designed to leverage a modest decline in the cosmetic company’s share price. It cost just $0.10 to open and will earn a maximum profit of 2,400 percent if EL closes between $50 and $52.50 on expiration. Gains will erode below that level and turn to losses below $47.50.
— Option Monster