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November 26, 2013  Tue 3:16 AM CT

LCC: SEE CHART GET CHAIN FIND STRATEGIES
U.S. Airways has soared to multi-year highs, and one large trader is betting that any pullbacks will be limited through early next year.

optionMONSTER's tracking systems detected the sale of 11,811 January 24 puts in a single print for the bid price of $1.67. The trade was above the previous open interest of 10,695 contracts, showing that it is a new position.

The put seller will keep the $1.67 credit as profit if LCC remains above $24 through expiration in mid-January. The trader will be on the hook to buy shares below this level, though that may be the intent if he or she is hoping to pick up the stock at an effective discount of $22.33. (See our Education section)

LCC was down fractionally yesterday to close at $24.24. The airline carrier has surged 50 percent in the last three months, spiking to a six-year high of $25.49 on Nov. 12, but has stalled at current levels in the last week.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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