One investor is playing key chart levels ahead of Tempur
Sealy's earnings report next week.
optionMONSTER's Heat Seeker monitoring system detected the
purchase of about 3,200 November 39 calls for $1.85 and the sale
of an equal number of December 34 puts for $1.50. Volume was more
than 15 times open interest at both strikes, indicating that new
bets were placed.
generates income, while creating an obligation to buy stock at
lower levels. Owning calls locks in a purchase price, letting
investors cheaply position for a rally. Combining the two
strategies is highly bullish, resulting in a position that's
similar to owning shares. (See our
The unusual thing about the trade is that it used different
expiration months. As a result, the investor has only three weeks
of upside exposure, but eight weeks of downside risk. That
suggests they're wagering on strong numbers when earnings come
out after the closing bell on Nov. 5.
TPX rose 0.91 percent to $38.81 yesterday. It gapped violently
lower after cutting guidance in June 2012 and has been trying to
work its way higher since. The stock peaked around $34 in 2010
and again last year, which could make some chart watchers expect
support at that level.
Overall option volume was 5 times greater than average in the
session, with the bullish combination accounting for about
three-quarters of the total.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.
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