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


OptionsHouse

Premium Services

Education & Strategy

Continue to melt up? Think debit call spreads

The U.S. equities market is continuing to melt up. Even though the labor market is stagnant, the Fed keeps hinting that a short term interest rate hike is coming sometime soon.

View more education articles »