Eagle Materials is near all-time highs, and the bulls are
looking for a breakout.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of 3,000 January 72.50 calls for $5.50. Equal-sized blocks were
sold at the same time in the January 62.50 puts for $2.25 and the
January 82.50 calls for $1.80. Volume was more than 24 times open
interest at all three strikes, indicating that new positions were
The overall trade cost $1.45 and will expand to $10 if the maker of
wallboard and cement closes at or above $82.50 on expiration--a
potential profit of some 590 percent. The trader also faces
potential losses to the downside because of the sold puts.
EXP rose 3.10 percent to $71.84 yesterday. It more than tripled
between late 2011 and early this year but has been churning in a
range since. The stock bounced near its 200-day moving average at
the start of August and is now sitting near its previous record
highs from 2005.
Yesterday's option strategy combines
bullish call spread
to enhance leverage. The fact the trader wrote puts at $62.50 also
reflects a belief that there isn't much risk of a drop below that
level. (See our
section for more.)
Some 11,000 contracts changed hands in the session, more than 50
times average amounts.
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