Baxter International is hovering near an all-time high, and one
investor doesn't want to let it get away.
optionMONSTER's Heat Seeker managing system detected the purchase
of about 2,700 May 77.50 calls for $0.98 and the sale of a matching
number of May 65 puts for $1.27. That translates into a credit of
The resulting position has an interesting performance profile. If
the supplier of medical products retreats to $65 on expiration, the
investor be assigned shares at that level. He or she also stands to
make money on the calls if the stock explodes into record
Should BAX do nothing, the entire position will expire worthless
and the trader will keep the $0.29. Its dual purpose is to avoid
missing a rally while programming a buy order at a lower price.
The investor can now sit back and let the options do the rest of
the work. (See our
section for more on how options can save you time.)
BAX rose 0.87 percent to $69.89 on Friday and is up 18 percent in
the last six months. The stock is now parked at the same level
where it peaked in September 2008 before the subprime market crash.
The Heat Seeker also detected a similar bullish trade in late
January, which cost $0.49 and more than tripled in value by earlier
last week. (See
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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