Traders are buying insurance on Goodyear Tire & Rubber, which has been running like a horse.
optionMONSTER’s Heat Seeker monitoring system detected the purchase of 2,000 November 22 puts for $0.95, along with the sale of 4,000 November 20 puts for an average premium of $0.305. Volume was more than triple open interest at both strikes, indicating that new positions were initiated.
The strategy is known as a ratio spread because twice as many contracts were sold as the number purchased. That reduces their cost, but also creates an obligation to buy more shares if the stock moves too much in the intended direction.
— Option Monster