OptionsHouse

Options Trading News

October 2, 2012  Tue 10:01 AM CT

CVA: SEE CHART GET CHAIN FIND STRATEGIES
Covanta is pushing against long-term resistance, and the bulls are looking for a breakout.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 7,500 March 17.50 calls for $0.70 and the sale of an equal number of March 15 puts for $0.30. Volume was more than 5 times open interest at both strikes.

The trade cost just $0.40 and lets the investor control 750,000 shares at a fraction of their cost. It will make money from a break above $17.50 but also faces downside below $15.

CVA, which burns garbage to generate electricity, is off fractionally at $17.14 in morning trading. The stock is now back to the same $17-$18 area, where it has peaked several times since early 2010. Some traders could expect a big rally if it is broken, which would explain today's bullish activity.

Overall option volume is more than 50 times greater than average so far today.
Share this article with your friends


OptionsHouse

Premium Services

Education & Strategy

Dissecting a big institutional trade

This week's column will study a recent call ratio spread. We're not recommending using this strategy because it has potentially huge risk. But we can learn from this different use of options by a large institutional investor.

View more education articles »