Fluor is near its long-term lows, but one investor apparently
finds it attractive at these levels.
optionMONSTER's systems detected the purchase of about 2,000
January 50 calls for $3.71 and the sale of an equal number of
January 42.50 puts for $3.31. Volume was more than 5 times open
interest at both strikes.
The investor now stands to profit from a rally in the construction
company because higher share prices will make the
appreciate and reduce the value of the
puts sold short
. If FLR declines, however, the opposite will be true and they will
While similar to owning shares, the position is much more leveraged
thanks to its low entry price of just $0.40. That would translate
into a profit of 900 percent if the stock rallies just 16 percent
to $54. It also differs from owning common equities because it will
track movements in the share price less closely as
and will expire worthless if the stock remains between $42.50 and
FLR declined 3.93 percent to $46.73 yesterday. It has lost 23
percent of its value in the last three months and is back near the
same level where it bounced in October. The last earnings report on
May 3 beat expectations and guidance was strong, which could also
make traders expect a rebound.
Overall option volume was triple the daily average, according to
the Heat Seeker.
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.
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