The bulls want to hitch a ride on Navistar.
optionMONSTER's Heat Seeker tracking system detected positive
activity in the truck maker, which crushed forecasts the last time
it reported earnings on June 9.
In one trade, an investor bought 2,500 September 55 calls for $1
and sold an equal number of September 45 puts for $1.20. The
transaction resulted in a net credit of $0.20 and pushed volume to
more than 20 times open interest in both strikes.
The trade, known as a bullish combination strategy, will earn
unlimited profits if NAV breaks above $55 by expiration and will
lose money below $45. If it closes between the two levels, the
investor will keep the credit and the options will expire
The stock rose fell 1.77 percent to $49.96 on Friday, and has been
moving sideways for the last three months. It is apparently
benefiting from strong demand, which in June led management to
retract cautious guidance from earlier in the year.
NAV has been consolidating above the $48 level where it peaked last
year. It's also been making incrementally higher lows and following
its 100-day moving average higher (red line on chart), which some
traders may consider evidence an uptrend remains in effect.
Another investor purchased 1,300 January 60 calls for $2.30, though
volume was below open interest in the strike.
Some 6,350 contracts changed hands on NAV in the session, 19 times
greater than average, according to optionMONSTER data.
(Chart courtesy of tradeMONSTER)
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