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December 31, 2013  Tue 12:21 PM CT

HAS: SEE CHART GET CHAIN FIND STRATEGIES
Toy makers have been ripping higher, and one investor is sticking with Hasbro.

Back on Oct. 21, a chunk of 13,000 April 52.50 calls was purchased for $2.20 as an investor looked for upside in the shares. That wager has paid off, and now they're rolling that long position to a higher strike price.

This time the trader unloaded all of the April 52.50s for $3.60 and bought a matching number of April 55 calls at an average premium of $2.26. Making the adjustment yielded a credit of $1.34 and keeps the investor exposed to further gains. (See our Education section about managing risk with options.)

Rival Mattel also saw bullish activity yesterday.

HAS is off 0.27 percent to $54.82 in afternoon trading but is still up 53 percent this year. Shares have been climbing as the company introduces new products and grows overseas. The stock gapped higher after its last earnings report on October and consolidated at all-time highs before starting to rally again in the last two weeks.

The next quarterly release is scheduled for Feb. 10, so those April contracts will benefit if the numbers are strong.

Overall option volume is 174 times greater than average in the name so far today, according to the Heat Seeker. Calls account for a bullish 97 percent of the total.
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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.

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