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Todd Horwitz's Under Armour Options Trade

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Todd Horwitz of Bubba Trading suggested on Bloomberg Markets a bullish options strategy in Under Armour Inc (NYSE: UAA) after the stock dropped more than 25 percent on earnings miss.

He wants to buy the March 22.50 call and he wants to finance it by selling a put spread. Specifically, he wants to sell two February 21 puts and buy two February 19 puts.

The trade is going to make money if Under Armour jumps above $22.50 at the March expiration. If the stock trades above $21 at the February expiration, the put spread is going to expire worthless and he is going to have a long call position. If it trades below $19, Horwitz is going to lose $4 on the put spread, but he's still going to have a chance to recover his losses until March. If the stock trades between $21 and $19 at the February expiration, he's going to have to buy 200 shares of Under Armour at $21.

Posted-In: Bloomberg Markets Todd HorwitzOptions Markets Media

 

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