One investor is using a hugely leveraged strategy in Adobe
Systems, which has been advancing into record territory since late
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 1,000 January 60 calls for $5.63. Equal-sized blocks
were sold at the same time in the January 50 puts for $2.71 and the
January 70 calls for $2.26. Volume was more than twice the previous
open interest at all three strikes, which indicates that new
positions were initiated.
The transaction had a net cost of $0.66 and will expand to $10 if
the software maker closes at $70 or higher one year from now. That
would be profit of more than 1,400 percent from an 18 percent gain
in the share price. (See our
section for more on the leverage potential of options.)
ADBE is down 0.45 percent to $59.12 in afternoon trading and up 57
percent in the last year. It's been rallying on strong earnings as
management successfully transitions customers to a
subscription-based revenue model.
Because of the
, today's option trade could lose money if the stock falls too far.
But the trader selected the $50 strike, near a key level where the
stock bounced in October after breaking long-term resistance in the
previous month. That price action could lead some chart watchers
expect support around that area and make the risk/reward profile
Overall option volume is more than twice the daily average in the
name so far today, with that bullish trade accounting for more than
80 percent of the total.
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.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.