Bull looks to ring in new year with H-P

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One investor apparently thinks that Hewlett-Packard might have a happy New Year.

optionMONSTER's Heat Seeker monitoring systems detected the purchase of about 20,000 January 24 calls for $1.77 to $1.82 and the sale of a matching number of January 31 calls for $0.33 to $0.35. Volume was above open interest in both strikes.

This call spread is designed to leverage a rebound in the share price. It cost about $1.46 and will earn approximately 379 percent if the tech giant closes at or above $31 on expiration. (See our Education section)

HPQ is down more than 4 percent to $21.87 this afternoon, so that option trader is hoping for a rally of more than 40 percent. The stock is sitting around its lowest price in more than six years, dragged downward by the broader market and a series of bad strategic moves by its directors.

Yesterday the computing giant hired Meg Whitman as its new CEO, but investors apparently want more evidence that a turnaround is taking place before driving shares higher. The other options volume in the name is mostly non-directional with investors selling calls and puts.

The company's next earnings release is scheduled for Nov. 21. Overall option volume is 4 times greater than average so far today.



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: HPQ

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