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January 9, 2014  Thu 9:18 AM CT

TIF: SEE CHART GET CHAIN FIND STRATEGIES
A complex trade is looking for further gains in Tiffany in the short term.

A call spread with just one day until expiration dominates today's option volume in the iconic jeweler.  A trader bought 3,000 Weekly 94 calls for $1.06 and sold 6,000 Weekly 96 calls for their bid price of $0.43. Volume was above previous open interest in each strike, indicating that this is new activity.

The trader is spending $0.20 to open this ratio spread, which is the amount at risk if TIF remains below $94 through the end of tomorrow's session. The maximum gain would come with shares at $96, but above that the trader is effectively short 300,000 shares of the stock. (See our Education section)

TIF is trading at $91.93, up 0.25 percent on the day. That is not far of the stock's closing high of $92.78 set on the last day of 2013.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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