CEMEX Breaks Out; How to Play It
December 22, 2011 3:36 PM
Shares of CEMEX (NYSE: CX) are shooting higher today; currently, shares are up by 6.39%, trading at $5.41. The stock has been consolidating above the 20-day and 50-day moving averages since the beginning of December.
CEMEX has now broken though the near-term high at $5.13; it now has its sights set on the $5.88 level. More importantly, CX has consistently shown higher highs and higher lows over the past three months, indicating that a bull trend is in place. Fro this point forward, dips should be bought.
The stock also has 7.82% short interest, which should add some fuel to the bull fire over the near-term.
So…What's the Trade?
Options traders can look to buy the Apr2012 $5.50/7.00 call spread for a net debit of $0.49. This is a nominally cheap way to play the new bull trend. The max loss on the trade is the premium paid, while the max gain (taken when shares trade 28.9% higher) is $1.01, or +206%.
CEMEX SAB de CV is a Mexico-based holding company principally engaged in the cement manufacturing. The company produces, distributes and sells cement, ready-mix concrete, aggregates and related building materials in more than 50 countries worldwide.
