Today’s tickers: CAL, POT, EEM, RMBS, NVDA & FXI

CAL – Shares of the U.S. air carrier are lower by approximately 1% today to $9.19 amid total declines of 12% on the stock since the opening bell on Monday morning. One option trader was observed make a bullish play on CAL, hoping to see clearer skies in the airline’s future. The investor established a long butterfly spread in the September contract by selling 10,000 calls at the September 12.5 strike price [body] for a premium of 65 cents. The body of the spread was combined with the purchase of 5,000 calls at the September 10 strike for 1.40 apiece [wing 1] as well as the purchase of 5,000 calls at the September 14 strike price for 37 cents per contract [wing 2]. The transaction cost the trader a net 47 cents (1*1.40 [wing 1] + 1*0.37 [wing 2] – 2*0.65 [body] = 0.47). Maximum potential profits of 2.03 will be realized by this individual if shares of CAL can rally 36% to $12.50 by expiration. A long butterfly spread was an excellent choice by the bullish investor responsible for the trade. The application of the spread effectively lowered the breakeven point to $10.47 instead of the breakeven point of $13.15 which would have resulted from pure bullish call buying at the central 12.5 strike price. – Continental Airlines, Inc.

POT – The feed products company has experienced a share price decline of 2.5% to $114.90. Taking advantage of the price erosion was one investor who sold a chunk of put options in the July contract. This individual was observed selling approximately 15,000 puts at the July 80 strike price for an average premium of 65 cents apiece. The aggregate premium enjoyed on the trade amounts to $975,000. He will retain the full premium assuming the price of POT remains higher than $80.00 by expiration next month. Inherent in the short sale is the obligation of the writer to have shares put to him at expiration if indeed shares plummet more than $34.00 or 30% in the next month. – Potash Corp. of Saskatchewan, Inc.

EEM– It appears that an option investor was drawn into looking for downside protection in emerging markets today judging by the sizeable September expiration strategy seen in this morning’s trade. Shares are currently trading at $33.71 for a 1.5% loss today. Meanwhile this investor placed a ratio put spread, which…
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