Tuesday, August 2, 2011

Trade of the Day: TBT January $34/$27 bull risk reversals

The Trade
A trader executed 10k of the January $34/$27 bull risk reversal for a $0.25 credit, or $25,000.

The trader is making a large bullish bet that TBT is nearing a base and will start to rally into January. TBT closed trading today at $28.95, basically on its 52-week lows. TBT has dropped 12.12% in the past month, 22.25% in the past 6 months, and 20.34% YTD. The spread has unlimited risk to zero and unlimited profit potential to the upside. 

The white line shown in the daily stock chart is the strike price of the long calls. TBT traded 229,757 option contracts today, over 4x average daily volume.


*Special thanks to Option Radar, BMO Capital, MEB Options, Bloomberg, Reuters, Optionistics, LiveVolPro, CBOE, AMEX, Option Monster, T.O.P. group, and all of the options desks and traders we work with to provide the option flow!

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.

No comments:

Post a Comment