Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Ratio Call Spread Looks For Shine To Tiffany Shares After Earnings

A one-by-two ratio call spread initiated on Tiffany & Co. today looks for limited, though sizable upside in shares of the high-end jeweller. Shares in Tiffany are down nearly 2.5% in the final hour of trading to stand at $88.55. The company is scheduled to report first-quarter earnings ahead of the opening bell tomorrow morning.

The options trader appears to have purchased 5,500 of the 23May’14 90.0 strike calls at a premium of $1.80 apiece and sold 11,000 of the 23May’14 93.0 strike calls for a premium of $0.70 each. The sale of twice as many of the higher-strike contracts effectively reduces the net cost of the position to $0.40 per contract and positions the strategist to make money above a breakeven share price of $90.40 through expiration at the end of the week. Maximum potential profits of $2.60 per contract are available on the ratio spread should shares in Tiffany & Co. rally 5.0% over the current price of $88.55 to settle at $93.00. The sale of twice as many of the 93.0 strike calls quickly eats into those profits if shares blow through the $93.00 level this week, with effectively unlimited potential losses to the upside starting to amass above an upper breakeven point at $95.60.


Tags:

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!