Market Overview

Is Xerox Ready to Pop?

Shares of Xerox (NYSE: XRX) are trading higher on the session by 0.73%, at $8.23. The stock was mired in red earlier in the session, but has since managed to regain the unchanged line and move higher.

Today's rebound came right as shares touched the 50-day moving average. Action like this is very constructive, especially given the fact that shares are trading above the 20-day and 50-day moving averages. Both averages are also upward sloping.

Echoing that bullish sentiment is today's options action, where a single trade purchased 45,000 July 2012 $9.00 calls for $0.30. This pushed today's call volume to 9x the daily average; over 95% of all calls traded have been on the offer.

Given the current spread of overall historical and implied volatilities (42% and 26%, respectively), getting long this option at only 29.20% is a smart play if you believe that upside is in order.

This is also a great way to play a swift move higher with much lower max losses. In this case, the max loss on 45,000 calls is $1.35 million. If the trader were to buy an equivalent amount of shares, he or she would have over $37 million on the table.

Xerox Corporation provides a portfolio of document technology, services and software, and the diverse array of business process and information technology outsourcing support.

Posted-In: Long Ideas Technicals Options Markets Trading Ideas

 

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