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Bearish strategy targets CF Industries

Chris McKhann (chris.mckhann@optionmonster.com)

A bearish spread tops today's option activity in CF Industries with shares of the fertilizer company just off 10-month lows.

optionMONSTER systems show that a trader bought 3,000 August 175 puts for the bid price of $6.65 and 3,000 August 135 puts for $0.72, while selling 6,000 August 155 puts for $2.26. The volume at all three strikes was more than open interest, so this is clearly new positioning.

The result is a butterfly spread that cost $2.85 to open. That amount is the most that can be lost if  CF is above $175 or below $135 at expiration in mid-August. The maximum profit of $17.15 would be realized if CF is right at $155 at that time. (See our Education section)

CF is up 1.19 percent this morning to $191.95. Shares were above $230 at the end of January but closed at $186.12 last week, their lowest level since last June.  

Total option volume in in CF is 13,000 CF options have changed hands this morning, compared to a daily average of 4,200 contracts.

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