Bullish Player Fashions Three-Legged Options Combo on Jones Apparel Group

JNY – Jones Apparel Group, Inc. – One long-term optimistic investor initiated a three-legged bullish options combination play on Jones Apparel Group today to position for a significant rally in the price of the underlying shares by expiration in February. Shares of the manufacturer of women’s clothing, footwear and accessories, under brand names such as Nine West and Anne Klein, increased as much as 0.92% during the first half of the trading day to secure an intraday high of $18.70. The bullish player populating JNY options sold 2,000 puts at the February 2011 $15 strike for premium of $0.95 each, purchased the same number of February 2011 $19 strike calls at a premium of $2.15 apiece, and shed 2,000 calls at the February 2011 $22.5 strike for a premium of $0.85 a-pop. Net premium paid to establish the three-legged transaction amounts to $0.35 per contract. Thus, the investor responsible for the trade stands ready to accumulate profits if Jones’ shares rally 3.475% over today’s high of $18.70 to trade above the effective breakeven price of $19.35 by February expiration day. Maximum potential profits of $3.15 per contract are available to the trader if the women’s fashion firm’s shares jump 20.3% to exceed $22.50 by expiration in February. Jones Apparel’s shares last traded above $22.50 back on May 3, 2010.

About Andrew Wilkinson 1023 Articles

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

Be the first to comment

Leave a Reply

Your email address will not be published.