Wednesday, June 1, 2011

Trade of the Day: TLT June $96/$99 ratio call spread

Trade of the Day:
A trader executed a TLT June $96/$99 ratio call spread, 5,000x10,000 for an $0.83 debit.

The trader is making a short term bullish bet on TLT. TLT closed trading today at $97.64. The spread's max profit occurs at an underlying stock price of $99 by June expiration. Since the spread is short more calls than long, the max risk is unlimited to the upside.  To read more about 1x2 ratio call spread click here.

The chart shown above is the TLT daily stock chart. You can see an inverted head and shoulders pattern has formed, and the trader could possibly see $100 as a price target before June expiration (obviously subject to interpretation).

TLT traded 71,352 contracts compared to average daily volume of 41,922. The 52-week range for TLT is a low of $88.14 and a high of $109.34.

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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