Computer Sciences Corp. (CSC)
A stock and option combination play on the information technology firm this afternoon indicates one bullish strategist expects shares in Computer Sciences Corp. to rally significantly come summer.
- It looks like the trader initiated a delta neutral position, selling 125,000 shares of the
underlying stock at a price of $50.65 a share
- And buying 5,000 calls up at the June $57.5 strike for a premium of $1.15 a-pop, on a 0.25 delta
The parameters of this transaction are quite attractive; Profit-making opportunities are available on the short stance in stock if shares decline, however substantially greater profits are attainable should CSC shares rally sharply ahead of expiration day, which this investor foresees as a likely scenario going forward.
As shares trend higher, delta on the long calls will grow much faster and outpace losses on the short stock position. Sufficient appreciation in Computer Sciences' shares within the next eight months may find this options trader rolling in dough by the time the calls expire in August.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.