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February 5, 2013  Tue 4:14 AM CT

BRKR: SEE CHART GET CHAIN FIND STRATEGIES
Bruker has been climbing on strong quarterly results, but one investor is keeping the stock on a short leash.

optionMONSTER's Depth Charge tracking system detected the purchase of 2,500 March 15 puts for $0.40 and the sale of an equal number of March 17.50 calls for $0.35. A mirror image of that activity occurred simultaneously against open interest in February, with the 15 puts sold for $0.05 and the 17.50 calls bought for $0.05.

This suggests that the investor owns shares in the maker of scientific equipment and has been using a so-called collar strategy to hedge the position. He or she then closed the position in February and rolled it forward in time by one month, collecting an incremental $0.05 of income in the process.

As a result, the trader has locked in a minimum exit price of $15 but must also sell their shares for $17.50 if they close above that level on expiration in mid-March. The company's next earnings report is scheduled for the morning of Feb. 19. (See our Education section)

BRKR fell 0.96 percent to $16.47 yesterday but is up more than 40 percent in the last year. The stock is now sitting at roughly the same level where it peaked last year, which could be leading some chart watchers to think it's at resistance and expect a pullback.

The trades pushed total option volume to 26 times greater than average in the session, according to the Depth Charge.
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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.

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