AZN – AstraZeneca PLC – The manufacturer of prescription pharmaceutical products attracted one bullish options strategist today despite the 1.70% decline in the value of its shares to $40.70. The optimistic trader positioned for a rebound in the price of the underlying stock by purchasing a plain-vanilla debit call spread in the July contract. The investor picked up 7,400 in-the-money calls at the July $40 strike for a premium of $2.60 each, and sold the same number of calls at the higher July $45 strike for $0.60 apiece. Net premium paid for the transaction amounts to $2.00 per contract. The investor starts to make money as long as AstraZeneca’s shares rally 3.2% to surpass the effective breakeven price of $42.00. Maximum potential profits of $3.00 accumulate should shares surge 10.6% to exceed $45.00 ahead of expiration day in July.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
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