One bullish trader is looking for Prudential Financial to break out of its range in coming months.
optionMONSTER's tracking systems yesterday detected the purchase of 1,000 April 87.50 calls for the ask price of $1.34 and the sale of 1,000 April 82.50 puts for the bid price of $1.82. Volume was above previous open interest in each strike, showing that this is a new combination spread.
The strategy is highly bullish because a rally would boost the value of the long calls while reducing premiums of the puts that were sold . But the opposite would occur if PRU falls, and if it drops below $82.50 the trader would be on the hook to buy shares at that level. (See our Education section)
PRU was up fractionally yesterday to close at $84.16. The insurance and investment company has been trapped mostly between $82 and $86 since reporting quarterly results on Feb. 5.
More From optionMONSTER