Thursday, March 4th, 2010
Top 3 Stock Option Plays and Trades
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Hertz Global Holdings, Inc. (NYSE:HTZ), Applied Materials, Inc. (NASDAQ:AMAT), and CIGNA Corporation (NYSE:CI) are three stock option trades and plays worth watching during today’s session.
Hertz Global Trader Bets on Range-bound Trading
Hertz Global Holdings, Inc. (HTZ, Free Analysis), a general use car and equipment rental business, saw one options trader establish short straddle position. The market saw 10,300 Sep 10 calls trade at $1.05 and 10,300 Sep 10 puts trade at $1.65 for a net credit of $2.70 per contract.
The trade suggests that shares of the rental car company will remain range-bound between $11.05 and $12.70 per share between now and the September expiration date. The strategy is considered risky as losses can be unlimited, while gains are limited to the premium obtained.
Also see: Free Introduction to Options Video Tutorial
Applied Materials Traders Bet on Sideways Trading
Applied Materials, Inc. (AMAT, Free Analysis), a provider of nano-manufacturing technology solutions, saw one options trader establish a short straddle position. The market saw approximately 31,200 Jul 13 calls trade at $0.60 and 31,200 Jul 12 puts trade at $0.86.
The trade suggests that shares of the technology provider will remain range-bound between $12.86 and $13.60 per share between now and the July expiration date. The strategy is considered risky as losses can be unlimited, while gains are limited to the premium obtained.
Also see: Options Trading 101 Free eBook (PDF)
CIGNA Trader Initiates Bearish Put Spread
CIGNA Corporation (CI, Free Analysis), an investor-owned health service organization, saw one trader initiate a put spread position. The trader purchased 24,000 Apr 33 puts for $1.10 and sold 24,000 Apr 30 puts for $0.30 for a net cost of $0.80 per spread.
The trade suggests that the health service company’s stock price will remain higher than $30.33, but lower than $34.10, between now and the April expiration date. The maximum profit from the position is $1.60 per spread, if the price closes below $30 per share at expiration.
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-- Written by David Breen
