Patriot Coal Corp. (PCX)
Options traders are placing bullish and bearish bets on the coal company today with roughly one week remaining before the firm reports fourth-quarter earnings ahead of the opening bell next Tuesday. One bullish player hoping to see PCX shares gravitate toward the January 14, 2011, 52-week high of $27.35, initiated a near-term call spread.
- The investor picked up approximately 4,700 now in-the-money calls at the February $24 strike for an average premium of $1.58 each
- Sold about the same number of calls at the higher February $27 strike at an average premium of $0.67 apiece
- Net premium paid to establish the bullish spread amounts to $0.91 per contract
Thus, the trader starts to make money if Patriot's shares rally another 3.6% over the current price of $24.05 to surpass the average breakeven price of $24.91 by February expiration.