AFL – Aflac Incorporated – Options traders initiated bullish positions on the largest supplemental health insurer today after the firm ditched all of its Greek sovereign debt at a loss in order to minimize the risk of additional writedowns. Aflac’s shares rallied as much as 5.98% to secure an intraday high of $46.20, but are currently up a lesser 3.15% to stand at $44.97 as of 12:20 pm (ET). Optimistic individuals sold short 1,500 puts at the July $42 strike to pocket an average premium of $0.57 per contract. Put sellers at this strike keep the full premium received on the transaction as long as Aflac’s shares exceed $42.00 through expiration day next month. Investors expecting shares of the insurer to continue to appreciate ahead of July expiration purchased 1,000 calls at the July $50 strike at an average premium of $0.19 per contract. Call coveters make money if, by expiration, shares of the underlying stock surge 11.6% over the current price of $44.97 to surpass the average breakeven point to the upside at $50.19.
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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