HAL – Halliburton Co. – Optimistic options investors established long-term bullish stances on Halliburton today to position for a significant recovery in the price of the oil services firm’s shares by next January. Halliburton’s shares rallied 2.35% to stand at $23.65 as of 12:35 pm (ET). One strategist purchased a plain-vanilla debit call spread to prepare for continued bullish movement in the price of the underlying stock. The trader picked up 3,600 calls at the January 2011 $27 strike for a premium of $2.15 each and sold the same number of calls at the higher January 2011 $32 strike for $0.87 in premium apiece. Net premium paid for the call spread amounts to $1.28 per contract. The investor loses the full amount of premium paid to purchase the trade if Halliburton’s shares fail to rally above $27.00 by expiration. Shares must surge nearly 19.6% over the current price of $23.65 in order for the trader to breakeven on the transaction at $28.28. The investor long the spread is prepared to amass maximum potential profits of $3.72 per contract if shares of the oil services provider soar 35.3% higher to surpass $32.00 by expiration day in January 2011.
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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