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September 23, 2011  Fri 11:38 AM CT

HPQ: SEE CHART GET CHAIN FIND STRATEGIES
One investor apparently thinks that Hewlett-Packard might have a happy New Year.

optionMONSTER's Heat Seeker monitoring systems detected the purchase of about 20,000 January 24 calls for $1.77 to $1.82 and the sale of a matching number of January 31 calls for $0.33 to $0.35. Volume was above open interest in both strikes.

This call spread is designed to leverage a rebound in the share price. It cost about $1.46 and will earn approximately 379 percent if the tech giant closes at or above $31 on expiration. (See our Education section)

HPQ is down more than 4 percent to $21.87 this afternoon, so that option trader is hoping for a rally of more than 40 percent. The stock is sitting around its lowest price in more than six years, dragged downward by the broader market and a series of bad strategic moves by its directors.

Yesterday the computing giant hired Meg Whitman as its new CEO, but investors apparently want more evidence that a turnaround is taking place before driving shares higher. The other options volume in the name is mostly non-directional with investors selling calls and puts.

The company's next earnings release is scheduled for Nov. 21. Overall option volume is 4 times greater than average so far today.
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Education & Strategy

The Strike-Based Greeks

The other Greeks (Gamma, Vega, and Theta) are calculated by using month and strike data, and not by individual option. These are called strike-based Greeks. Gamma, Theta, and Vega are all strike-based Greeks

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