Range play targets Hewlett-Packard

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Hewlett-Packard held most of last week's big gains even through the market downturn yesterday, but a large trade is expecting the stock to stay range-bound in coming months.

optionMONSTER systems show that 8,000 each of the April 17 puts and 21 calls traded for $0.28 and $0.30 respectively in what appears to be a short-strangle strategy. (See our Education section)

The position would take in a credit of $0.58, which would be the maximum profit if HPQ remains between $17 and $21 through expiration in mid-April. The risk is that the trader may have to buy shares at $17 and selling them at $21.

HPQ was down 0.68 percent yesterday to close at $19.07. The computer maker traded near $20 on Friday after gapping higher on its earnings report, posting its highest close since gapping down in August. Shares were trading below $12 in late November.

More than 96,000 HPQ options changed hands yesterday, more than triple its daily average in the last month.

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