Market News

November 28, 2012  Wed 11:41 AM CT

ADT is attracting a large call spread as the electronics-security company tries to push to new highs.

A trader bought 1,590 December 44 calls for $1.06 while selling 3,180 December 46 calls for $0.38, according to optionMONSTER's Heat Seeker tracking system. The volume at each strike was well above open interest at the beginning of the day, so this is a new ratio spread.

ADT is up 0.48 percent to $44.04 this afternoon. It opened at $42.38 after releasing earnings results yesterday and has been climbing since. Shares traded as high as $45 yesterday, a new high, but closed lower. The stock was down at a low of $35.38 in mid-October.

Today's call vertical spread cost the trader $0.30, which will be lost if ADT is below $44 at expiration. The maximum gain comes if the stock is right at $46, while the trader is essentially short shares above that price.
News Archives

Education & Strategy

Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

More education articles »