Options Trading News

April 25, 2013  Thu 3:47 AM CT

Shares of CF Industries rebounded sharply yesterday, and one trader is betting on more gains ahead for the fertilizer producer.

optionMONSTER's Heat Seeker system shows that a trader bought 4,950 August 210 calls for the ask price of $2.76 and sold the same number of the August 230 calls for the bid price of $0.60. Volume was above the previous open interest at each strike, indicating new activity.

This bullish call spread cost the trader $2.16, which is the amount at risk if shares remain below $210. The maximum gain is $17.84 if the stock is above $230 by expiration in mid-August. (See our Education section)

CF climbed 4.27 percent to $187.09 yesterday after seeing its lowest prices since June last week. Shares were above $230 into the start of January.

More than 16,000 CF options traded overall yesterday, quadruple its daily average of 4,000 for the last month. 
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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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