Dell Computer (DELL, news, chart, volatility) seems to have been the subject of some bottom fishing Thursday. The stock bucked the bearish trend and was trading up 3 cents to $13.53 late in the day when 5,000 January 2010 calls with the 20 strike traded offerside for $1.65 a contract and 5,000 of the January 2010 with the 30 strike traded on the bid for 25 cents. Open interest increased by more than 3,400 in both contracts, which suggests that yesterday’s action was opening. If so, the strategist is possibly looking for shares to recover and move higher throughout 2009. They paid a $1.40 debit and have a possible payoff of $8.60 if DELL rallies to $30 or more by January 2010 options expiration (462 days).
About the Author (Author Profile)
Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.