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.
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