Someone thinks W.R. Grace still has room to run.
optionMONSTER's tracking systems detected the purchase of 4,460
September 72.50 calls in the chemical producer for $5.70.
Equal-sized blocks were sold in the September 65 puts for $2.80 and
the September 82.50 calls for $1.90 seconds later. There was barely
an open interest at any of the three strikes before the trade
appeared, indicating these are new positions.
The investor paid $1 to open the trade and will earn a maximum
profit of 900 percent if GRA closes at or above $82.50 on
expiration. It also creates the potential for losses to the
downside because of the
puts sold short
. (See our
GRA is down 0.75 percent to $72.08 in afternoon trading. The stock
is up 31 percent in the last year, fueled by a steady stream of
positive earnings reports.
Strategies like today's illustrate the myriad ways that options can
be combined to express an investment thesis. In this case, the
trader may have missed the earlier rally now wants an inexpensive
way to profit from a continued rally. It also obligates the
investor to buy the stock on a pullback to $65, which he or she
might be willing to do anyway
Almost 14,000 contracts have traded in GRA so far today. That's
more than quadruple the volume in a typical session.
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.