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Options Trader Eyes New Highs in Shares of Teck Resources, Ltd.

Posted on the 04 April 2011 by Phil's Stock World @philstockworld

TCK - Teck Resources, Ltd. – Options traders flocked to Teck Resources today as shares in the Canadian natural resources company rallied on reports that China’s Minmetals Resources, Ltd., extended a C$6.3 billion hostile takeover bid for Canada’s Equinox Minerals. Teck Resources also received an upgrade to ‘Top Pick’ with a 12-month target share price of $69.00 at Cormark Securities, helping shares in the Vancouver, BC-based company rise as much as 7.7% to secure an intraday high of $57.24. Near-term call options have been active throughout the first half of the trading day. Roughly 4.2 calls are changing hands on the stock for each single put option in action. Longer-dated options caught our eye after bullish player initiated a call spread in the August contract. It looks like the investor purchased 3,000 calls at the August $70 strike for a premium of $1.52 each, and sold the same number of calls up at the August $80 strike at a premium of $0.45 apiece. Net premium paid to establish the spread amounts to $1.07 per contract. Thus, the trader profits in the event that Teck’s shares jump 24.2% over today’s high of $47.24 to surpass the effective breakeven price of $71.07 by expiration day in August. Maximum potential profits of $8.93 per contract pad the investor’s wallet should shares in the natural resources company soar 39.8% higher in the next five months to surpass $80.00 by expiration. Shares in TCK reached their all-time high of $65.37 on January 12, 2011.

BSX - Boston Scientific Corp. – By the looks of trading patterns in Boston Scientific Corp. options today, investor appetite for puts on the medical devices maker has yet to be sated. Near-term puts were popular at the end of last week, and the contracts…


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