The recent market volatility has knocked Life Time Fitness back
to earth, and now one trader thinks the buyers will return.
optionMONSTER's tracking programs detected a low-cost combination
trade that will profit from a rebound in the fitness-center stock
while producing limited downside risk. The investor sold 3,000 June
30 puts for about $0.80 and bought an equal number of June 40 calls
for $0.80. Volume was more than 18 times open interest in both
The trade cost almost nothing to implement. It will make money if
LTM rallies above $40 by expiration and lose money below $30.
LTM rose 2.22 percent to $34.55 Friday and is down 11 percent in
the last month. The shares have been falling along with the rest of
the market but had ripped higher after management forecast
better-than-expected full year results on April 22, reversing weak
guidance in February.
The stock has now returned to the same price range where it traded
in 2008 before the stock market crashed. It also seems to have
found support above the $31 level where it peaked in August. The
trader may now consider that level as support, making him or her
more comfortable being short the puts.
LTM is scheduled to present at the William Blair 30th Annual Growth
Stock Conference on June 16, two days before the options expire.
Overall options volume in the name was 19 times greater than
average in the session.
(Chart courtesy of tradeMONSTER)
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