Bulls looking to drive Navistar higher
David Russell | email@example.com
optionMONSTER's Heat Seeker monitoring system detected the purchase of about 2,500 September 22 calls for an average premium of $0.79. Roughly the same number of September 24 calls were sold for $0.30. Volume exceeded open interest at both, indicating that new positions were opened.
The trade cost $0.49 and will earn a profit of more than 300 percent if the shares close at or above $24 on expiration. It's known as a bullish call spread because it leverages a move between two prices.
NAV is up 2.85 percent to $20.56 this afternoon but came into the session down by half in the preceding six months. Earnings have been weak and management has been scrambling to comply with new emission requirements as fines mount at the Environmental Protection Agency.
The stock is now attempting to hold its lowest levels since the start of 2009. Some chart watchers could be expecting a bounce but may also be worried about even lower prices if current support gives way. Call spreads are a common way to play such a situation because they limit risk. (See our Education Section for other strategies.)
Overall option volume is almost twice the daily average so far today, with calls outnumbering puts by 5 to 1.