Thursday, June 9, 2011

Trade of the Day: Radio Shack October $13/$17 ratio call spread 1x2

The Trade:
A trader bought the Radio Shack October $13/$17 ratio call spread for 2,000x4,000 contracts at $0.88 to open.

The trader is making a bullish bet that Radio Shack is trading near its bottom. Radio Shack is down 22.65% from the previous month and 43.44% in the previous 6 months. RSH closed trading today at $12.83, which is 52-week lows.

The chart shown above is the Radio Shack daily stock chart. The white line shown is the strike price of the short calls, which is also where the stock maximizes its profit. It's also interesting to note that the 14-day RSI is below 13.

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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