tradeMONSTER: Trade free for 90 days

Options Trading News

January 29, 2013  Tue 5:16 AM CT

HRB: SEE CHART GET CHAIN FIND STRATEGIES
One investor is looking for more gains from H&R Block, which has been rampaging higher for months.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 21,220 April 25 calls for $0.15 and the sale of an equal number of April 20 puts at the same time. There was barely any open interest at either strike when the trade occurred, indicating that this is new combination trade. It cost essentially nothing to implement.

If the tax-preparation company appreciates, the long calls stand to gain in value while the short puts will dwindle. The opposite will happen to the downside, so the position is directionally similar to owning shares.

The main difference is that it will become worthless if HRB closes between $20 and $25 on expiration. It appears the investor wants cheap exposure to a runaway rally with modest risk of loss, tailor made to coordinate with income-tax reporting season in April. (See our Education section)

HRB rose 1.12 percent to $22.58 yesterday and is up 39 percent in the last six months. Yesterday combination trade pushed total option volume to 23 times greater than average in the session, according to the Heat Seeker.
Share this article with your friends


Related Stories

HRB

H&R Block draws highly bullish bet

December 10, 2014

The tax-preparation company fell sharply on poor quarterly results yesterday, but one trader is looking for a rebound by the annual filing deadline.

tradeMONSTER: Trade free for 90 days

Premium Services

Archived Webinar

The Art of Trading: Forgiving the Spread

Education & Strategy

Know thy Greeks!

One of the most important roles played by the Option Pricing Model is the calculation of an important family of...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER