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Betting on TJX and Research in Motion

What could it be that’s causing such heavy put volume in TJX today?

With minutes left in the trading day, over 2,800 of the July 37.5-strike puts have traded hands, making it the second most active of all the TJX options. Coincidence or not, that was the exact same trade our panel recommended buying on last Friday’s Options Action as a bearish play on the hot retailer.

Exact trade and breakdown are below.

MIKE’S TJX OPTIONS CHAIN

  • BUY JULY 37.5-STRIKE PUT FOR $1.00

HOW MIKE’S TJX TRADE MAKES MONEY

  • PROFITS BELOW $36.50
  • LOSSES ABOVE $36.50

Our other trade centered on a much more familiar but battered name: Research in Motion . Shares have been in a rout. And with the company waiving the white flag, some investors have speculated that the smart phone maker will get taken out. To the Options Action crew, such a scenario seemed more like a lottery ticket than an actual sound investment thesis. After all, look no further than Hewlett’s purchase of Palm as a cautionary tale. Still, with shares trading at $14.50 a share, options still provide a much more capital efficient way to play for a takeover. And with dreams of Mega Millions dancing in everyone’s head, Dan Nathan of RiskReversal.com suggested the options equivalent of a lottery ticket, buying the way out of the money RIMM Jan ’12 call spread for $0.75.

Trade and breakdown are below.

DAN’S RIMM OPTIONS CHAIN

  • BUY JAN 20-STRIKE CALL FOR $1.05
  • SELL JAN 27.5-STRIKE CALL FOR $0.30

HOW DAN’S RIMM TRADE MAKES MONEY

  • PROFITS BETWEEN $27.50 - $20.75
  • LOSSES BELOW $20.75

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    Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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