How trader is using calls to play Cintas

By optionMONSTER,  May 10, 2012, 03:05:43 AM EDT

One investor is turning time into money with Cintas.

optionMONSTER's systems show that a trader bought 3,750 June 37.50 calls for $1.81 and sold an equal number of September 40 calls for $1.93. The latter calls were well above the previous open interest, indicating that an existing position was rolled from strike to the other.

The investor probably owns shares in the company, which provides employee uniforms to a broad range of businesses and institutions. So he or she is collecting the 1.4 percent dividend yield, plus the credit from selling the calls, and stands to make an additional $2.50 on the stock price after today's trade.

Our tracking systems detected similar activity in February, suggesting that the same investor remains active in the name. (See our Education section for more on how to manage risk.)

CTAS fell 1.88 percent to $38.56 yesterday. Normally a slow-moving stock, CTAS exploded higher in December after a strong earnings report and has been gradually advancing since then.

Overall option volume was more than 7 times greater than average.




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.


This article appears in: Investing, Options

Referenced Stocks: CTAS



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