Wednesday, March 23, 2011

Trade of the Day: PNC Financial April $60/$57.50 bull reversals 2,000x

The Trade
A trader sold 2,000 April $57.50 puts at $0.65 and bought 2,000 April $60 calls at $1.93 for a debit of $1.28 or $256,000.

As you can see from the graph above, the bull reversal has unlimited risk to zero and unlimited profit potential. The max risk is being put the stock if the underlying is trading below $52.50 before April expiration. The trader sold the puts to partially finance the purchase of the calls. The break even price level at April expiration is $61.28. PNC closed today at $61.27.

The line shown is the break even price level. The 52-week range is a low of $49.43 and a high of $70.45. PNC traded 8,630 contracts today compared to average daily volume of 7,209. PNC will report earnings on April 21st and its dividend is expected on April 12th.

The PNC Financial Services Group, Inc. is a diversified financial service company. The Company is engaged in retail banking, corporate and institutional banking, asset management, residential mortgage banking and global investment servicing, providing many of its products and services nationally and others in its primary geographic markets.

No position at this time. Position declarations are believed to be accurate at time of writing but may change at any time and without notice.

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