ACLI – American Commercial Lines Inc. – A bullish risk reversal initiated on the provider of dry and liquid cargo barge transportation in U.S. inland waterways this morning suggests one option strategist is expecting the price of the underlying stock to appreciate ahead of December expiration. ACLI’s shares increased 1.3% to stand at $27.71 by 12:15 pm ET. The bullish player appears to have sold 1,000 puts at the December $25 strike at a premium of $2.15 each in order to purchase the same number of calls at the higher December $30 strike at a premium of $2.50 apiece. The net cost of the transaction amounts to $0.35 per contract. Thus, the investor responsible for the risk reversal is positioned to make money should American Commercial Lines’ shares surge 9.5% in the next four months to trade above the average breakeven price of $30.35 by expiration day. ACLI shares last traded above $30.35 back on September 23, 2009. The share price is currently up more than 58% since June 9, 2010, when the stock touched a 6-month low of $17.53.
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.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers