CHL – China Mobile, Ltd. – Shares of the mobile telecommunications company that offers services in Mainland China and Hong Kong are up 1.90% at $52.74 as of 11:40 am ET. An investor expecting the price of the underlying stock to reach a new 52-week high by January expiration appears to have established a bullish risk reversal. A number of recent positive signals indicating stable momentum in the rapidly-growing Chinese economy have helped China Mobile’s shares climb higher. Premier Wen Jiabao said China will boost domestic demand, reports revealed that China’s service industries expanded, and the manufacturing PMI released on October 1 jumped to a four-month high. A bullish options strategist hoping to see more good news going forward positioned for shares in China Mobile to surge over the next four months. It looks like the trader sold 4,686 puts at the January 2011 $47.5 strike for a premium of $0.90 each in order to buy the same number of calls at the January 2011 $57.5 strike at a premium of $0.90 apiece. The trade positions the bullish player to make money if CHL’s shares jump 9.025% over the current price of $52.74 to trade above the effective breakeven price of $57.50 by expiration day in January. China Mobile’s shares last traded up at their current 52-week high of $54.70 back on August 17, 2010.
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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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