Software giant Adobe (ADBE) has been trading in a range for the past few months. The recent market weakness has sent shares towards the lower end of its range, as well as its 200-day moving average. At least one trader is betting that shares will bounce higher.
That’s based on the June $420 call options. Over 5,010 contracts traded, a 36-fold rise from the prior open interest of 138. The option expires in 109 days.
The trader paid about $61 for the options. As shares are currently around $462, the option is about $42 in-the-money already, accounting for a large chunk of the option’s price.
- This Industry is Exploding Faster Than It Has in 15 Years
1,700 people are moving to Central Florida every week.
And the numbers are only increasing as more and more people are banking the end of the pandemic drawing near.
And one company, which just received critical approval to list on a prestigious public exchange, could be on the verge of going on a huge run.
The company has been a strong performer in the past year, outpacing the S&P 500 Index by about 10 points. With double-digit revenue growth, triple-digit earnings growth, and a fat 41 percent profit margin, shares look attractive at current levels.
Action to take: The June call option is attractive given its timeframe. As an in-the-money trade, it’s likely to hold on to considerable value, and should move higher dollar for dollar with shares. That can likely lead to mid double-digit gains in the coming months.
Traders looking for a directional bet here could buy the June $480 calls as well, which trade for about $28.15. That’s a much lower price with higher return potential, but could also lose money if shares don’t move in-the-money.