Kevin Kelly of Recon Capital Partners shared with the viewers of Bloomberg Markets his options trade in Allergan plc Ordinary Shares AGN.
The stock is trading more than 25 percent lower year-to-date and Kelly thinks there is a lot of uncertainty in the market right now. He is concerned about a possible impact of the presidential election on the market and there is also the risk associated with the earnings season. The company is going to report earnings on November 2 and Kelly wants to use a stock replacement strategy to reduce the risk.
He thinks it would be a good idea to sell the stock and buy the January 230 call for $12.80. The most he can lose is $12.80 and the break even for the trade is at $242.80 or 6.5 percent higher.
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