As You Were

• Posted by Adam Warner
• on February 4th, 2010

Some action from yesterday via MKM Partners.

A large bullish trade was initiated in the iShares MSCI Emerging Markets Index (EEM, $39.58) via a March 41/44 call spread for $0.67. The opening transaction breaks even with the stock 5.3% above current levels and makes a maximum of $2.33 with spot 44 or higher at expiration.

The PowerShares DB Agriculture Fund (DBA, $25.38) has declined 6% since early January (vs. ‐3.3% for the S&P 500 Index), and an apparently bullish investor bought the February 26 strike calls 15,862 times for $0.15, which appears to double a position initiated on February 2. The position breaks even at 26.15, which is 3% above the current level.

Qualcomm (QCOM, $39.59) reported earnings on January 27 and has plunged 16.2% since then (vs. +0.6% for the S&P 500 Index). An investor looking for moderate upside in the stock through March expiration sold February 38 strike puts 9,387 times at $0.42 to buy the March 40/43 1×2 call spread 9,387 times for $1.05 and a net debit of $0.19. In the event that QCOM stock declines further, the position gets long at the equivalent of 38.81. If QCOM appreciates, the trade makes a maximum of $2.81 with spot at 43.00 on expiration and continues to be profitable up to the equivalent of 45.81.

That’s 2 days in a row of cheapie call spec. in DBA fwiw.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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