Bulls want to ride demand in Navistar

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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.

NAV Chart 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 worthless.

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)



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: NAV

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