Option Traders Playing Spreads in Financials Page 2
Earnings plays are still attracting some attention, and for that we're looking at mall clothier Aeropostale (ARO - commentary - Cramer's Take), which is due to report earnings after the close tomorrow. Anticipation about the earnings is baked into an implied volatility premium -- coming in at 112.8% vs. a historic reading of 108.3%, and while shares were able to pull off a 9.8% higher close at $14, today's 11-fold increase in options trading volume showed traders looking for an eminent breach of the 52-week low. This was expressed through a long front-month put spread between strikes $12.50 and $10, where the trader bought the higher strike and sold the lower for a net debit of 65 cents. The break-even on this trade requires a decline of 7% below the incumbent 52-week low.
P.S. Will you be there when Cramer makes his next move?
Strong brands and companies with vast market exposure can help bolster your portfolio. Jim was able to lock in a 64% gain by buying Ingersoll-Rand at $13 and selling at $22.50. Action Alerts PLUS members were the first to see these moves. Were you among them? Get Free Access Today!
Options Slowdown Brings May Spreads to CH Robinson 12/1/2008 4:04 PM EST And the obviousness of demand destruction has left a particular mark in commodity stocks and ETFs.
Options Option Traders Shop Target 12/1/2008 12:34 PM EST Traders are buying 'collars' in the retailer in order to get discount downside protection.
At the time of publication, Darst had no positions in the stocks mentioned.
Rebecca Engmann Darst is the Portfolio Manager for TheStreet.com?s Options Alerts Portfolio newsletter and an equity options analyst for RealMoney Each Thursday at 6:30 a.m. EST, she delivers the early-morning lowdown on option volume and sector trends on CNBC's "Squawk Box."
Prior to her work in the equity options market, she spent seven years in Scandinavia as a Copenhagen-based chief reporter for a European Commission news service, correspondent for Spanish daily El Mundo and Radio Netherlands, followed by stints at Nordea Bank and Saxo Bank.
RSS FEEDS
PODCASTS
