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Bull-Run Continues On United Technologies Corp. Call Options
By: Caitlin Duffy   Monday, February 27, 2012 2:09 PM
Symbols: CCL, FSLR, UTX
Shares in FSLR have declined roughly 8.0% since the put spread was initiated, allowing the investor to sell the spread today at a net premium of $3.58 per contract. Next, it appears the strategist established a fresh bearish stance on First Solar, buying the 12,533-lot Mar. $27/$34 put spread at a net premium of $1.80 per contract. Profits are available on the position in the event that FSLR's shares decline another 9.2% to breach the effective breakeven price of $32.20 by expiration. The put player may walk away with maximum possible profits of $5.20 per contract at March expiration should the price of the underlying plunge 23.9% to settle below $27.00. Of course, the trader may choose to take profits on the new bearish spread in advance of expiration should the spread widen out in the next few weeks.

Carnival Corp. (CCL)– Bearish activity in the front month options on cruise operator Carnival this morning suggests the price of the underlying shares may sink to fresh 52-week lows in the next few weeks. Shares in CCL dipped to as low as $29.22 following the Costa Concordia tragedy in January and remain depressed more than one month later, with shares today down 0.80% on the session to stand at $29.73 as of 11:55 a.m. in New York. Traders snapped up in- and out-of-the-money puts to prepare for a CCL pullback, exchanging around 2,295 contracts at the Mar. $28 strike against open interest of 1,154 positions. Most of the $28 strike put options appear to have been purchased for an average premium of $0.31 each, thus positioning buyers to profit at expiration in the event that Carnival's shares drop 6.9% to breach the effective breakeven price of $27.69. Mar. $29 strike puts attracted bearish bets as well, with around 1,500 of the contracts purchased for an average premium of $0.59 each. In-the-money puts at the Mar. $31 strike with a price tag of $1.70 apiece were bought some 750 times this morning. Carnival Corp. is scheduled to report first-quarter earnings on March 22, nearly one week after the March expiry put options will have expired. But, investors buying around 1,200 puts at the April $30 strike for an average premium of $1.88 each today may see the value of their contracts rise should shares in the cruise operator drop following the Q1 report next month.

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