REV – Revlon, Inc. – The manufacturer of an array of cosmetics, beauty tools, fragrances, skincare and other personal care products appeared on our ‘hot by options volume’ market scanner in the first half of the trading session after one options investor initiated a bullish transaction on the stock. Revlon’s shares are currently lower by 0.15% to $12.83 as of 12:27 pm (ET), but shares rallied as much as 2.80% at the start of the trading day to reach an intraday high of $13.21. One long-term bullish individual appears to have purchased a plain-vanilla debit call spread, buying 3,600 calls at the November $17.5 strike for a premium of $1.30 apiece, and selling the same number of calls at the higher November $25 strike for a premium of $0.25 each. The net cost of buying the spread amounts to $1.05 per contract. Thus, the optimistic investor is prepared to profit if Revlon’s shares surge more than 44.5% over the current price to trade above the effective breakeven point on the spread at $18.55 by expiration day. The trader stands ready to accumulate maximum potential profits of $6.45 per contract should the cosmetics maker’s shares jump 95% to trade at or above $25.00 by November expiration. Revlon’s shares have not traded above $25.00 since June 1, 2006.
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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