Con-Way got destroyed on Friday, but one investor apparently thinks that the selling was overdone.
optionMONSTER's Heat Seeker tracking system detected two large transactions in the California-based trucking company, which ended the session down 9.03 percent to $28.82. They were about 25 minutes apart, but given their size and similarity in strike price and expiration month, they appear to be linked.
First, 2,000 September 30 calls were purchased for $1.10, followed by the sale of 1,000 September 30 puts for $3.40. There was no open interest in either contract before the transactions appeared.
The resulting position cost $1.20 to implement and is strongly leveraged to the upside. Given that in-the-money puts were sold, they will quickly profit from any move higher. Above $30, they will make even more money because they own twice as many calls.
Even if the two trades were not connected, they would still be bullish on their own. Given that CNW normally trades fewer than 450 contracts a session, they were probably linked.
The decline in the share price came after revenue matched consensus estimates, but revenue narrowly missed. There was also concern about the strength of the economy going forward.
Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.