Trades bet on limit to Agco upside
Traders apparently believe that upside potential will be limited in Agco.
optionMONSTER's monitoring systems detected the sale of about 2,000 January 45 calls for $2.30 to $3.10 yesterday. Volume surpassed open interest of 321 contracts, an indication that new money was put to work.
Short calls generate income and fix the price where a stock must be sold. The strategy is usually done in conjunction with long shares, reflecting a belief upside will be limited through expiration. (See our Coaching section)
AGCO fell 6.84 percent to $46.04 to close below its 50-day moving average yesterday, but shares are up 9 percent in the last month. The maker of farm equipment is estimated to announce quartelry results on Feb. 2.
Overall option volume in the name was 7 times greater than average yesterday.
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