One investor is looking for more gains from H&R Block, which
has been rampaging higher for months.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 21,220 April 25 calls for $0.15 and the sale of an
equal number of April 20 puts at the same time. There was barely
any open interest at either strike when the trade occurred,
indicating that this is new combination trade. It cost essentially
nothing to implement.
If the tax-preparation company appreciates, the
stand to gain in value while the
will dwindle. The opposite will happen to the downside, so the
position is directionally similar to owning shares.
The main difference is that it will become worthless if HRB closes
between $20 and $25 on expiration. It appears the investor wants
cheap exposure to a runaway rally with modest risk of loss, tailor
made to coordinate with income-tax reporting season in April. (See
HRB rose 1.12 percent to $22.58 yesterday and is up 39 percent in
the last six months. Yesterday combination trade pushed total
option volume to 23 times greater than average in the session,
according to the Heat Seeker.