A large trader is looking for NCR to rebound after pulling back
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 5,000 January 39 calls for $1.20 and the sale of an
equal number of January 33 puts for $0.90. Volume was more than 10
times open interest at both strikes, indicating that new bets were
locks in the price where a stock can be purchased, while
generates income but creates an obligation to buy in the event of a
pullback. Combining the two strategies produces a highly leveraged
long position. (See our
The trader paid just $0.30 and stands to earn huge profits if the
maker of bank-teller machines and cash registers pushes above
$39.30 on expiration. He or she also faces losses on a drop below
$33. If the stock remains between those two levels through
mid-January, the position will expire worthless.
NCR rose 2.87 percent to $36.54 on Friday. It's up 43 percent so
far this year but is down 8 percent in the last month after
quarterly revenue missed expectations on Oct. 24.
The shares are now attempting to stabilize near their 100-day
moving average. They also peaked around $33 in June, which could
make some chart watchers comfortable writing puts at that level.
Total option volume was 6 times greater than average in the
session, 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 Nasdaq, Inc.
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