One investor is using options to get long Monsanto on the cheap.
Our Heat Seeker monitoring system detected the
of 3,000 July 120 calls for $2.40 and the
of an equal number of July 97.50 puts for $2.57. Volume was more
than twice open interest at both strikes.
He or she collected a credit of $51,000 and now holds a position
that will perform similarly to owning 141,000 shares in the
agribusiness giant. But it will behave differently than owning
stock outright. The correlation will increase if MON rallies toward
$120 or falls toward $97.50, generating profit to the upside and
losses to the downside.
Outside of that range, the position will perform the same as
holding 300,000 shares. But if MON stays between $97.50 and $120,
the options will slowly lose value and eventually become worthless.
This way they won't miss a rally, but are tying up much minimal
capital than they would owning stock. (See our
section for other ways to get more bang for your buck with
MON is up 1.32 percent to $109.71 in afternoon trading. It began
the year around $117, the highest price since September 2008 before
pulling back to its 200-day moving average by late January. It's
now bouncing at that level, which could make some chart watchers
think its long-term uptrend remains intact.
Overall option volume is quadruple the daily average so far today
in MON, with that bullish trade accounting for more than half the
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