AAPL-Bull Buys Call Spread
Today’s tickers: AAPL, GLD, XLU, AEP, CI, CHK, XEL, OSK, LLL, JAVA & BSX AAPL - Apple, Inc. – A long-term bullish play on the iPod manufacturer suggests the price of the stock could skyrocket by July 2010. Apple’s shares increased more than 1% during the session to $196.96. It looks like one trader initiated a call spread in the July contract to position for a significant jump in the price of the underlying in the next seven months. The investor purchased 3,000 calls at the July 220 strike for a premium of 13.60 apiece, and sold the same number of calls at the higher July 250 strike for about 6.18 each. The net cost of the bullish play amounts to 7.42 per contract. AAPL’s shares must surge 15.5% from the current price in order to reach the breakeven point on the trade at $227.42. Maximum potential profits of 22.58 per contract are available to the investor if the stock jumps 27% to $250.00 by expiration in July. GLD - SPDR Gold Trust ETF – A bullish risk reversal on the gold ETF today points to a rebound in gold bullion prices by expiration in February 2010. Shares of the GLD added nearly 1% during the trading day to stand at $110.23. One trader sold 9,650 puts at the February 110 strike for 4.70 each in order to partially finance the purchase of 9,650 calls at the same strike for 4.90 apiece. The net cost of the reversal amounts to just 20 cents per contract. Profits amass on the transaction if shares of the fund rally through the breakeven price of $110.20 by expiration day in February 2010. XLU - SPDR Utilities Select Sector ETF – Shares of the exchange-traded fund comprised of common stocks of companies from the electric utilities, multi-utilities, independent power producers, energy traders and gas utility industries, increased 0.75% during the trading day to a new 52-week high of $32.08. The fresh high for the fund perhaps inspired the bullish options activity we observed on the XLU today. One investor banked profits on a previously established long call position in the January 2010 contract. The trader originally bought 5,000 calls at the January 29 strike for a premium of 92 cents apiece back on November 6, 2009, when shares were at $28.90. The investor sold the calls today for 2.95 apiece and took in net profits of 2.03 per contract. It seems…
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