I noticed some bullish activity this Morning on Cooper Tire and Rubber Co. CTB. At 10:45 am one investor put on a trade via a 1x2 Risk Reversal. The investor bought 7,000 jun 22.50 calls @ $0.65 and sold 3,500 jun 20 puts at $1.05 to partially finance his purchase. This is a very bullish bet. The individual is selling jun 20 puts to bring in some premium to help finance his or her bullish bias. The max risk to the downside theoretically is if the price of the underlying stock falls to 0.00 minus the credit received. The reward is unlimited and the cost is reduced by selling the put position to collect a credit. The investor is in a position to make money if the stock Rallies to close above $22.75 at expiration.
This Transaction.
CTB jun 22.50 Call bought at .65 x 7,000 = $455,000 debit
CTB jun 20.00 Put sold at 1.05 x 3,500 = $367,500 credit
If the stock does not move the the investor can loose $87,500
If the Stock closes below 20 the investor takes on the obligation of being Put the stock @ 20 on the 3,500 contracts or 350,000 shares
Max profit theoretically is unlimited
I am not sure if this transaction is attached to stock.
This stock normally trades about 1 million shares per day, today it saw almost 2.5 million shares traded on a break of resistance as viewed by the daily chart.
CTB is scheduled to report earnings on 5/04/10
I added a small position via some common @ 21.80 and will look to add more if the stock pulls back to previous resistance and it acts as new support
No comments:
Post a Comment