Manitowoc saw bullish activity last week, and one investor
optionMONSTER's Heat Seeker tracking program detected the purchase
of about 1,200 November 11 calls for $0.45 and the sale of about
2,800 October 8 puts for $0.45. Most of the transactions priced at
the same time, suggesting activity by a single large player.
The trade resulted in a net credit of $72,000 and has an unusual
return profile because of the different expiration months selected.
The position will earn unlimited profits if the maker of cranes and
food-service equipment rallies above $11 by November expiration. It
also stands to lose money on a more modest push to the downside in
the next five weeks because of the October contracts.
The trade is interesting because the investor
that expire in less time and are
closer to the money
. They used the money to pay for calls that have more time and are
further from the money.
The strategy is an example of the almost-infinite number of ways
that options can be combined to craft positions to match investors'
expectations for a stock or index. (See our
MTW fell 4.83 percent to $8.87 yesterday and has lost more than 40
percent of its value in the last 2-12 months. Its last earnings
report on July 26 was mixed, with revenue strong and management
optimistic. Earnings, however, missed forecasts.
The shares are now attempting to hold support around the same price
area where they
in mid-2010. Call buyers also stepped into the name
, looking for a bounce from this level.
Overall option volume in MTW was more than triple the daily
average, 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 The NASDAQ OMX Group, Inc.
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