Bullish Move in CA: Options

CHICAGO (TheStreet) -- At least one investor sees limited downside in CA(CA Quote) and is following through with that bet by selling puts weeks ahead of the company's earnings announcement.

Looking at the Nov. 20 puts in CA, we saw an investor sell these options 10,000 times for approximately 50 cents each with the stock trading at $21.54 a share. These puts are trading down 10 cents with a 27 delta, and are home to current open interest of 2,984 contracts.

CA shares, currently up 22 cents on the day, have rallied 30% since a recent low of $16.44 in July. It looks like the investor is betting the stock will hold higher than $19.50, the break-even on this trade. This represents a drop of 9% from current levels.

We expect CA to announce earnings figures on Oct. 29, and it is interesting that at least one investor sees limited downside and believes the stock could hold around its current levels after the company's quarterly report.

Put selling like this is a sign of moderate bullishness, and could be an example of how risk aversion is abating in the market. We have also seen implied volatility as represented by the CBOE SPX Volatility Index nearly breach 30 of late, but the VIX is currently down 1.5 in today's trading to 27.2.

The investor is willing to cap his gain at 50 cents if the stock remains higher than $20. That explains why this trade banks on limited upside and limited downside.

-- Written by Jud Pyle in Chicago