Clorox has been running like a horse, and one investor doesn't
want to let it get away.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of 4,000 May 92.50 calls for $0.25 and the sale of an equal number
of May 80 puts of $0.10. Volume exceeded open interest at both
strikes, indicating that new positions were initiated.
The strategy cost just $0.15 to implement and ensures the investor
a piece of the action if the stock surges above $92.50 by
expiration. He or she may expect such a move after the company's
earnings report on May 1.
CLX is off 0.27 percent to $88.45 in afternoon trading but is up 21
percent so far this year. It's been rallying along with other
consumer-products companies as investors shift money back into
equities following years of preferring bonds.
Today's trade has the advantage of costing little, preventing the
investor from missing a big move before expiration. Because of the
, he or she is also on the hook to buy shares for $80 if they fall
below that level by expiration. That probably wouldn't be a
problem, as the trader already likes CLX. (See our
section for more on how options can be used to manage trades.)
More than 8,500 contracts have traded in the name so far today,
nearly 5 times the average amount.
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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