Options Trading News

June 11, 2013  Tue 4:14 AM CT

DuPont is challenging long-term resistance, and the bulls are positioning for a breakout.

optionMONSTER's Heat Seeker trade scanner detected the purchase of 15,000 October 57.50 calls for $1.42 and the sale of an equal number of October 50 puts for $1.12. The trade accounted for about 80 percent of total volume in the chemicals giant during the session.

Owning calls locks in the price where investors can buy a stock while selling puts lets them collect income from DD not falling. Combining the two strategies results in a position very similar to owning the equity, but at much lower cost and with much greater leverage.

Yesterday's trade cost just $0.30 to initiate and will earn profit of some 400 percent from the stock moving less than 10 percent by expiration. It also programs a buy for $50 on a drop below that price. He or she may be expected support around that price level because it was resistance in March and April. (See our Education section for more.)

DD rose 0.14 percent to $55.52 yesterday and is now back near the same level where it peaked in 2010. Its earnings have mostly beaten expectations in recent quarters.

Total option volume was 3.5 times greater than average in the session, according to the Heat Seeker.

Share this article with your friends

Related Stories


DuPont investor parlays winnings

November 9, 2015

A large trader rolled bullish calls for two consecutive sessions at the end of last week, collecting quick profits while staying positioned for more potential gains.


Bulls bet DuPont will keep running

November 5, 2015

The chemical company up 33 percent since the start of October, with most of those gains following the ouster of CEO Ellen Kullman.


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »