How the bulls are playing Dana
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,500 June 20 calls for $1.75. Equal amounts were sold at the same time in the June 18 puts for $1 and the June 22 calls for $0.85. Volume surpassed open interest at all three strikes, indicating that new positions were initiated.
The investor collected a credit for $0.10 and stands to earn $2 more if the auto-parts maker closes at $22 or higher on expiration. He or she is also on the hook to buy shares for $18 if they go below that level, but the stock peaked around that price in March, which could make the trader expect support and feel comfortable writing the puts. (See our Education section for more the strategy, which combines put selling with a vertical spread.)
DAN is up 1.37 percent to $19.88 in afternoon trading. It peaked at $23.46 in October but then gapped down to $19 after quarterly results missed expectations. Today's bullish three-way trade is looking for that bearish move to be retraced, possibly when the next numbers are released on Tuesday, Jan. 14.
Total option volume is 8 times greater than average in the name, according to the Heat Seeker.