KBR Inc. (KBR, news, chart, volatility) is seeing double normal options order flow after a player seems to have opened an ambitious vertical spread on the construction and engineering company. 11,000 KBR calls have traded, compared to 800 puts. Most of the action is in the March contracts, after 5,000 calls on the 17.5 line traded on the offer for $2.00 a contract and 5,000 of the 25s on the bid for 50 cents. With shares up 49 cents to $14.82 and today’s volume in those two contracts easily exceeding existing open interest, it looks like opening of a bull call spread, where the strategist paid $1.50 for a potential $6.00 payoff if KRB rallies to $25 or more by March options expiration.
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.