BAX – Baxter International, Inc. – Medical supplies company, Baxter International, Inc., attracted one long-term bullish options investor during the first half of the trading session. The trader initiated a three-legged bullish options combination play in order to position for shares to climb higher by expiration day in January 2012. Baxter’s shares are currently up 2.95% to stand at $49.04 as of 12:45 pm ET. It looks like the investor paid a net premium of $0.35 per contract for the spread, in which he purchased 1,000 in-the-money calls at the January 2012 $47.5 strike, sold 1,000 calls at the January 2012 $60 strike, and shed 1,000 puts at the January 2012 $40 strike. The transaction positions the trader to make money if BAX shares exceed the effective breakeven price of $47.85 through expiration day. Maximum potential profits of $12.15 per contract are available to the investor should the price of the underlying stock surge 22.35% over the current price of $49.04 to trade above $60.00 by expiration. Baxter’s shares last traded above $60.00 back on January 21, 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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