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, Dan Nathan spoke about options activity in
Home Depot IncHD ahead of earnings. He said that the options market is implying a move of 3 percent in either direction, which is less than the four quarter average of 3.3 percent.
Call options volume was 4 times average call options volume and calls outnumbered puts three to one. When the stock reached $120.40 a trader sold 4,000 contracts of the August 120 calls to close and bought 4,000 contracts of the September 125 calls for $1.00. The trade breaks even at $126 or approximately 5 percent higher at the September expiration.
Nathan presented a chart which shows that
Home Depot Inc pulled away from its four year trend line and it is now consolidating. Any disappointment could lead to a pull back to the trend line, thinks Nathan. He added that options are very cheap heading into the earnings, which shows to him that investors are very complacent.
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