Spread sees more upside in Avon
David Russell | email@example.com
optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 January 25 calls for $1.80 and the sale of 2,500 January 30 calls for $0.43. Another 2,500 of the January 20 calls were sold at the same time for $4.87, but volume was below open interest in those.
It appears that an investor came into the session with a winning trade in the 20s, which was then closed and rolled to a vertical spread in the 25s and 30s. The trader collected a credit of $3.50 and stand to earn an additional $5 if the stock closes at or above $30 on expiration. (See our Education section)
AVP rose 0.38 percent to $23.68 yesterday and is up more than 70 percent since touching a long-term low at $13.70 in November. The company has been reshuffling management and cutting costs in attempt to turn around its business following a slump in emerging markets and a leadership crisis in recent years.
It had peaked around $30 in early 2011 before its major selloff, and yesteday's trader is now targeting that level.
Total option volume was almost 8 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by more than 118 to 1.