Fluor Corporation (FLR) is a company providing engineering, construction, project management and procurement for industries worldwide. Shares of the company’s stock are currently trading around $78.30 in a 52 week range of $52.79-$79.95. FLR has been outperforming the market adding over 33% to share prices year to date. Options activity in FLR during today’s trading session indicates trader’s believe there could be more upside in store for FLR. Early in the session a trader sold 2,000 Jan 72.5 puts for $0.70. This is a very bullish order that represents this trader’s strong belief that shares of FLR will close above $72.50 on January expiration. The high amount of risk attached to this trade tells us that this trader has relatively high bullish conviction in FLR. On a chart the stock looks good as well. Shares of FLR are trading well above the Ichimoku Cloud and the future cloud is upward sloping indicating there could be more upside in store for FLR. We believe that all of these factors are lining up well for a covered call trade in FLR.
Trade: Buying 100 shares of FLR stock for $78.30 for every Jan 72.5 Call Sold for $6.50
Reward: $70 per 1 lot
Breakeven: $71.80
If shares of FLR close above $72.50 on January expiration this trade will reach its maximum profit potential of $70 per 1 lot. This trade is also profitable anywhere above $71.80. Should the stock close above $72.50 on expiration this trade will net an annualized return of 8.2%.