Bulls like Fidelity before earnings

optionMONSTER

Fidelity National Financial reports earnings tomorrow afternoon, and the bulls are getting long now.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 September 32 calls for $1.65 and the sale of an equal number of September 30 puts for $1.15. Volume was more than 25 times open interest at both strikes, indicating that new positions were initiated.

It cost $0.50 to implement the strategy, which will behave similarly to owning shares in the title-insurance company. If it rallies, the long calls will appreciate in value while the puts sold short will dwindle. The opposite will happen to the downside. (See our Education section)

FNF is up 1.55 percent to $31.88 in morning trading. It rallied late last year, triggering quick profits of about 100 percent for some option traders, but has been consolidating since. The stock is now sitting at its 100-day moving average, which could make some chart watchers think that it's ready for the next leg higher.

The trader may also feel comfortable writing puts at $30 because that was a support level in late January.

Total option volume is 22 times greater than average so far today, according to the Heat Seeker.


More From optionMONSTER

View Comments (0)