OptionsHouse

Options Trading News

May 16, 2013  Thu 4:45 AM CT

SCSS: SEE CHART GET CHAIN FIND STRATEGIES
Someone apparently thinks that Select Comfort is going back to the old highs.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,010 December 25 calls for $2.35 and the sale of an equal number of December 35 calls for $0.37. There was barely any open interest at either strike before the trade appeared, indicating that new money was being put to work.

The trade cost $1.98 and will generate a maximum profit of 405 percent if the mattress stock closes at or above $35 on expiration. (See our Education section for more on the strategy, which is known as a bullish call spread because it leverages a move between two prices.)

SCSS fell 0.04 percent to $22.47 yesterday. The stock had an explosive run between mid-2009 and April 2012 as a shift to new types of bedding drove the shares up more than 3,000 percent. It's been languishing since then as growth slows.

The shares seem to have made a double bottom around $17 in recent months and have been working their way higher since. Yesterday's trader is apparently looking for a return to the all-time high near $35 made last year.

Total option volume was 6 times greater than average in the session, with calls outnumbering puts by 30 to 1.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »