Markets

Bull buys into makeover at Xerox

Xerox is pushing to a two-year high, and one trader is apparently confident that it will keep running.

XRX

optionMONSTER's Heat Seeker tracking program detected the purchase of 10,000 April 12 calls for $1 and the sale of an equal number of April 12 puts for $1.10. The trade resulted in a small credit of $0.10 and will deliver major leverage on almost any move higher or lower.

Known as a synthetic long, the strategy allows the investor to simulate owning 1 million shares without any initial cash outlay.

XRX rose 1.53 percent to $11.91 in morning trading and is challenging levels last seen in September 2008. Its last earnings report on Oct. 21 was better than expected and management issued strong guidance for profitability. Revenue, however, was slightly below forecasts.

The company, traditionally known for its copiers, is undergoing a major transformation after it bought Affiliated Computer Services to add outsourced business services to its product offering.

The bullish trade on XRX pushed total options volume in the stock to twice the average level so far in today's session.

(Chart courtesy of tradeMONSTER)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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