Get Met… It Pays

Shares of MetLife (NYSE: MET) are trading higher on the session by 3.40%, at $34.39. The stock has been consolidating above the $32.50 level for the past few days following the market's sharp decline in early August.

Notably, MetLife managed to bottom in the $30.00-33.00 channel, which was major support/resistance following the March 2009 lows. Share volume has also been extremely high over the past two weeks, which lends credence to the idea that MET has formed a high volume bottom on top of historical support.

Over the near-term, the stock has formed a bullish flag pattern, with $35.00 being the trigger point for a sharp rally higher. With shares trading $34.39 now, there is favorable risk/reward in the name; lets explore this further…

A break above $35.00 would likely force shorts out of the name, which could easily have MET testing the $37.00 level. If shares continue to consolidate there, longs will more or less be given the go ahead to reenter the name to establish longer-term positions. If this were to occur you could easily see MetLife trading $40.00.

So…What's the Trade?

Bulls have a number of choices… You could buy shares here with a stop at the daily low ($33.44), you could buy the September $34/35 risk reversal for a net credit of $0.17, or buy the December $35/40 call spread for a net debit of $1.78.