Options Trading News

January 15, 2014  Wed 11:03 AM CT

Kimberly-Clark is consolidating after a big run, and the bulls are coming back.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,100 February 110 calls for $0.55 and the sale of 1,000 February 100 puts for $0.66. Volume was more than twice open interest at both strikes, indicating that new positions were initiated in the diaper maker.

Buying calls locks in the right to owns a stock at a certain level, while selling puts generates income but creates downside risk. Combining the two strategies is similar to owning shares, but at a much lower cost. For instance, today's trade will deliver the same performance of 52,700 shares at less than one-hundred the cost. (See our Education section for more on the leverage potential of options.)

KMB is up fractionally at $105.46 this afternoon. It shot to an all-time high over $110 in November, dropped in December, and has been churning in a range since.

The consumer-goods company's next earnings report is scheduled for the morning of Friday, Jan. 24. The last release in October beat expectations.

Total option volume is 4 times greater than average in the name so far today, according to the Heat Seeker.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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