Big Bet on Cement Producer: Options

By Jud Pyle, CFA, chief investment strategist for the Options News Network

CHICAGO (TheStreet) -- Although Cemex S.A.B de C.V. (CX Quote) did not announce any notable news Monday, one investor boosted options activity on a bet that the cement producer's stock is range-bound.

An investor sold 5,000 April 14-to-15 strangles at $4.10 per spread with the stock trading at $12.95. The in-the-money April 14 puts, currently trading down 10 cents, are home to current open interest of 178 contracts, and the out-of-the-money April 15 calls, also currently trading down 10 cents, are home to current open interest of just 86 contracts, according to ONN.tv's Sidewinder report.

CX shares, which closed up two cents to $13.28 on the day, have rallied more than 69% since reaching a recent low of $7.90 as recently as July. This strangle seller is betting on volatility to slow and time decay to kick in throughout the next eight months for the stock to remain in range to make money.

The investor needs CX shares to expire between $9.90 and $19.10 (the break-even prices of the strangle) for a maximum profit of $4.10 per spread.

It's interesting that we saw one investor with high risk tolerance in the stock after the run CX shares have seen throughout the last month. This strangle seller betting on a range in CX can lose money if these shares rise or fall outside of this range by April expiration.

-- Written by Jud Pyle in Chicago