OptionsHouse

Options Trading News

July 3, 2012  Tue 11:01 AM CT

STX: SEE CHART GET CHAIN FIND STRATEGIES
A trader sees shares of Seagate Technology trapped in a limited range for the next couple of weeks.

STX is up 2.02 percent today to $25.05, continuing to rally since bouncing off support just below $22 a month ago. Shares of the computer hard-drive maker traded at a 52-week high of $32.55 at the start of May.

Seagate's total option volume of 39,000 is twice its daily average. A trader bought 9,300 August 25 calls for the ask price of $1.53 and, at the same time, sold 9,300 July 25 calls for the bid price of $1.03, according to optionMONSTER's systems. The volume at each strike was more than open interest, so this is a new calendar spread.

The strategy is designed to profit if STX is around that $25 strike price by expiration. The July options will decay more quickly than those in August.

The maximum risk in the trade is the debit of $0.50, at least up until the first expiration. That loss would be realized if shares have moved sharply in either direction by expiration. (See our Education section)
Share this article with your friends


Related Stories

STX

Seagate put sale sees end to bloodletting

May 10, 2016

The data-storage provider is down 43 percent in the last month, but put sellers are betting on a floor in coming months.

STX

Is Seagate Tech getting ready to bounce?

May 5, 2016

The data-storage maker gapped down after reporting bearish quarterly results last month, but traders are looking for a rebound in coming weeks.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

Volatility and the Option Pricing Model

OptionsĀ are derivatives of underlying assets and can be boiled down to a mathematical formula. As such, the value of an option is determined by a formula calledĀ the Options Pricing Model.

View more education articles »