Protection Purchased as USG Rallies

Shares of USG Corporation (USG) are trading higher on the session following the release of the company’s Q3 earnings this morning. The stock is up 6.34%, to $24.17. This marks a massive turnaround, as shares were trading off nearly 8% premarket, at $20.89.

USG reported a Q3 EPS loss of $0.28 on revenues of $828 million; the Street was looking ($0.10) per share on revenues of $867 million.

One trader is taking advantage of the decreased implied volatility in USG to buy protection today. A short while ago, the November $23.00 put was purchased 2,349 times, on the offer, for $1.45; volume has since risen to 3,837 contracts. Open interest is only 782, indicating new positioning.

Overall put volume is running at 3x normal volume with 60% of all puts traded being purchases on the offer.

30-day implied vol is off 6.6% today to 51.93%; 10-day realized vol is registering 45.44%.

USG Corporation, through its subsidiaries, is a manufacturer and distributor of building materials. The company produces a range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction, as well as products used in certain industrial processes.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.