OptionsHouse

Options Trading News

November 14, 2013  Thu 11:48 AM CT

JCI: SEE CHART GET CHAIN FIND STRATEGIES
Johnson Controls has been going straight up, and the bulls think it won't stop.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 3,000 December 50 calls for $0.75 and the sale of an equal number of December 47 puts for $0.70. Volume is more than 7 times open interest in each strike, indicating that new positions were initiated.

The long calls lock in a $50 entry price on the shares, while selling the puts generates income and creates an obligation to buy JCI on a drop to $47. Combining the two strategies is highly bullish, letting the investor benefit from a quick rally while programming an entry price in the event of a pullback.

He or she paid just $0.05 to open the trade. It will track movements less closely as time progresses and expire worthless if the stock remains between the two strike prices on expiration next month. (See our Education section)

JCI is up 1.2 percent to $49.11 in afternoon trading and has risen 60 percent so far this year. It's been rallying along with other industrials and broke out to new all-time highs after a strong earnings report on Oct. 29.

Total option volume is almost twice the daily average so far in the name.
Share this article with your friends


Related Stories

JCI

Johnson Controls draws covered calls

January 21, 2016

A large investor apparently bought shares in the technology and industrial company and sold April calls against it to lower the cost of the trade.

JCI

Notable option activity in equity names

January 20, 2016

Nearing the halfway mark in today's session, here are the individual equity names with unusual option activity on optionMONSTER's ActionTracker data system.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

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.

View more education articles »