Value hunters are turning to Stanley Black & Decker after a
big selloff in the tool maker last week.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 3,000 January 80 calls for an average premium of $2.12
and the sale of an equal number of January 72.50 puts for $1.93.
Volume exceeded previous open interest at each strike, indicating
that new money was put to work.
locks in the price where a stock can be bought, while
generates income and creates an obligation to buy at a certain
level. Combining the two strategies is strongly bullish and results
in a highly leveraged upside position.
The investor paid just $0.19 to open the trade and now stands to
double his or her money for every $0.19 that the stock closes above
$80.19 on expiration early next year. The trade also faces
unlimited losses below $72.50. (See our
SWK rose 3.75 percent to $77.16 on Friday but plummeted 14 percent
earlier in the week after profit missed forecasts and management
cut guidance. The drop brought the shares back to the same $77-$80
range where they peaked several times in 2011 and 2012 before
breaking out early this year. Some chart watchers may think they're
now attractive and wish to get long.
Total option volume was more than 4 times greater than average in
the session, according to the Heat Seeker.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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