Three-way play is bullish on Conn's

optionMONSTER

A bullish spread dominates today's option activity in consumer product retailer Conn's.

More than 9,000 CONN options have traded, compared to a daily average of just 219 contracts in the last month. Virtually all of the volume is in an October three-way spread.  

optionMONSTER systems show that a trader bought 3,000 October 50 calls for $5 and, at the same time, sold 3,000 each of the October 60 calls for $1.70 and the October 40 puts for $2.20.

This combination uses the sale of the higher-strike calls and the puts to offset the cost of the October 50 long calls . The trader spends just $1.10 to get that exposure up to $60 while giving up gains above that level and faces the possibility of buying shares below $40 if assigned. (See our Education section)

CONN is up 0.7 percent to $48.33 this morning, matching Monday's all-time record closing high. Shares were last below $40 on April 19.

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