Bullish position extended in MetLife


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MetLife is consolidating after a rally, and investors are staying bullish.

optionMONSTER's Heat Seeker monitoring program detected a surge of activity in the December and March contracts as a large upside strategy was apparently extended. An even 50,000 contracts traded each in the December 30 puts (bought for $0.630), the December 40 calls (bought for $0.29), and the December 35 calls (sold for $1.62.)

All three traded against open interest, suggesting that existing positions were closed. Around the same time, similar-sized transactions appeared in the March 35 calls for $2.47, the March 30 puts for $1.31, and the March 42 calls for $0.51. Volume was below open interest in the March contracts.

The strategy combines a vertical spread with short puts. Premium from selling the downside puts and upside calls reduces the cost of owning calls that are near the money. That boosts the traders' leverage to the upside while obligating them to buy shares on a drop to $30.

MET is up 1.95 percent to $35.55 this morning and 15 percent since the start of August. It's been fluctuating in a range for the last month while making higher lows, which could be leading some chart watchers to believe that it will continue to appreciate.

Overall option volume is 42 times greater than average so far today, 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.

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

This article appears in: Investing , Options

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