Harris fell on a weak revenue number earlier this month, and now one bull is getting long on the pullback.
optionMONSTER's Heat Seeker tracking system detected the purchase of 2,100 November 55 calls for $1.30 and the sale of an equal number of November 40 puts for $0.95. Volume was more than 6 times open interest in both strikes.
The trade cost $0.35 to open, and represents a relatively low-risk bet that the maker of communications gear will rally. It will make money on a push toward or above $55, and lose money to the downside.
HRS is now between the two strike prices--down 1.30 percent to $48.23 in afternoon trading--so the calls and puts are out of the money. That makes time crucial to the success of the position: The quicker the shares move, the more the options will respond. If the stock remains between $40 and $55 on Nov. 18, the entire position will expire worthless.
The shares zoomed from about $26 to $48 between July 2009 and early 2010 and have been consolidating since then. They started making higher lows last summer and rallied on a strong profit outlook in early March.
Weak sales of military radios hurt results on May 3, but HRS found support at a higher level. Some chart watchers may consider that evidence it remains in a bullish trend.
Overall option volume in the name is 8 times greater than average so far today.
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