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Dan Nathan said on the show that he noticed unusually high options activity in
Target CorporationTGT.
Nathan explained that the company is going to report earnings on Tuesday and options are implying a 3 percent one-day move. When the stock was trading at $67.50, a trader bought 1,000 contracts of the November 66.50 puts and sold 1,000 contracts of the November 63.50 puts, paying $0.60 for the spread. This set up breakeven at $65.90 with a maximal gain of $2.40.
Target had a 10 percent move higher in the last couple of weeks and the trader is expecting for the stock to retrace a good part of the move.
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