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Huge bullish bet on RadioShack

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A huge trade is betting that RadioShack will rally by this spring.

optionMONSTER's tracking systems detected the sale of 20,000 March 1.50 puts for the bid price of $0.09 on Friday and, a few minutes later, the purchase of more than 20,000 March 3 calls mostly for $0.15. Volume was far above previous open interest in each strike, indicating that both are new positions.

This combination spread is highly bullish, as a rally will boost the price of the long calls while diminishing the value of the puts that were sold . But the opposite will occur if the stock drops, and the trader will be on the hook to buy shares if they fall below $1.50. (See our Education section)

RSH surged 9.01 percent on Friday--or $0.20--to close at $2.42. The beleaguered electronics retailer, which was trading above $23 in late 2010, has been trapped mostly between $2 and $4 for the last 18 months.

The company has not announced the date of its next earnings release, but last year's calendar suggests that it will report fourth-quarter results near the end of February. Friday's combination trade expires on March 21.

Total option volume in the name reached almost 45,700 contracts, 6 times its daily average for the last month.

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