Options Trading News

March 25, 2014  Tue 2:47 AM CT


Adobe Systems has been pulling back, but one big investor still likes it for the long haul.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 January 70 calls for $4.30. Equal sized blocks were sold at the same time in the January 55 puts for $2.33 and the January 80 calls for $1.65.

The investor paid just $0.32 to open the position and now stands to collect $10 if the software maker closes at $80 or higher by early next year. That would represent a profit of more than 3,000 percent from ADBE climbing just 23 percent.

There is risk associated with that leverage: Because they also wrote the 55 puts, they face potentially big losses if the stock falls below that level. He or she probably considers that unlikely because support $58 was support recently. (See our Education section for more on the hazards and benefits of selling options.)

ADBE fell 2.82 percent to $65.25 yesterday, but is up 52 percent in the last year. It's been rallying amid strong earnings and after successfully transitioning its sales to a subscription model.  Monday's complex strategy gives it plenty of time to rally again.

Total option volume was 8 times greater than average in the session, according to Heat Seeker.

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