Tobacco Company, Reynolds American, Inc. (RAI), Seeing Bullish Options Flow Today

Reynolds American, Inc. (RAI) manufactures and sells various tobacco products. RAI is trading at the upper end of the 52-week range of $55.22-$77.68 around $76.94. Year to date the stock has performed fairly well appreciating by almost 20%. Today RAI has been weak, selling off by $0.57 or .74%. About an hour after the open an unusually large bullish options bet hit the tape.

Initially a trader bought 4,054 of the RAI June 80.0 Calls for $0.65 when the stock was trading at $76.65. As one of the first few recordings on OptionsHacker, the stock drove a few cents higher, but fell a few minutes later reaching a trough at $76.52. Over 8,400 of those contracts have been traded. Although the stock is down $0.57 the call premiums rose by about $0.10.

Trade: A trader bought 4,054 of the RAI June 80.0 Calls for $0.65
Risk: $65 per lot
Reward: Unlimited
Breakeven: $80.65

The stock moved higher after these calls hit the tape and the calls moved with it. They have traded as high as $0.75 today meaning a trader could have netted a $200 profit on a 20 lot.

Andrew Keene

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