Someone is hedging a bet in Chicago Bridge & Iron with the
shares on the verge of a historic breakout.
optionMONSTER's Depth Charge monitoring system detected the
purchase of 2,000 January 55 puts for $1.95. Equal numbers of
contracts were sold at the same time in the January 50 puts for
$0.75 and the January 70 calls for $0.70, translating to a cost of
The trader probably owns shares in the engineering company and is
using the options as a hedge. He or she now stands to collect $5 if
the stock falls to $50 by expiration in mid-January but has also
agreed to sell the position for $70 if it goes to that level. The
strategy combines elements of a
. (See our
CBI fell 0.89 percent to $59.91 yesterday but is up more than 60
percent in the last year. It has rallied back to its previous
all-time highs from late 2007 and early 2008, which could leave
some chart watchers concerned about a pullback. Yesterday's
three-way strategy provides protection against a decline while
holding out the potential for $10 in profit.
Total option volume in the name was 7 times greater than average in
the session, according to the Depth Charge.
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