The February $5.00 option bid is currently $0.15. With the stock currently at $4.70, someone out there is offering the opinion (with their option bid) that the stock is likely going higher by about 10% (the stock will need to surpass $5.15 for any profit) in the next 2 months.
Options players can move on this in 2 ways.
- First, bullish traders can purchase contracts of the option and hope through a rise in the stock, the option increases in value before the February 21st expiration date. Earnings are likely the first week of February. With most banks reporting in mid January, a push up in anticipation for earnings could create a nice level of revenue for the option.
- The second option is for call sellers and revenue generators of the stock out there. They can sell the call option(s) on any blocks of 100 shares earned for the $0.15 per contract. It provides a safety valve in pushing your purchase price down $0.15 per share. It also locks in a profit of about 10% at the $5.00 strike price in 2 months if your purchase price is around today's price. Given the troublesome earnings of the company, some insurance might not be bad thing either.
Technically, the chart has hit the $4.50 range 3 times in the last year with a bounce happening afterwards. A yearly daily chart is below.
** This blog is used for informational purposes only. It should not be used as a recommendation to buy or sell any security. Do your own due diligence before trading or investing. If you would like research done on a stock you own or are thinking about buying, email at kdkoptions@gmail.com **
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