10 Red Carpet Option Trades

Are Your Investments Going to Fail You This Year?

Under Armour (UA)

By Chris Johnson and Jon Lewis

OK, if you didn’t see “The Blind Side,” we highly encourage you to catch it. The last movie we cried at was Rudy (what guy didn’t), but it was close
in a few spots during this movie, which is based on the true story of a homeless teen turned NFL player.

Of course, we’re here to make some money on Oscar picks, not get verklempt. If you saw the movie, you probably figured out within the first 10 minutes
that Under Armour (UA) had to have paid a hefty premium for positioning
their product in the movie. (For what it’s worth, Taco Bell (YUM) and
Border’s Books (BGP) were also well-placed companies in the movie.)

Looking closer at UA, the sports supplier has been consolidating for all of 2010 as it trades just above a number of intermediate-term trendlines.
The Street recently increased their bearish bets on the stock, as the current short interest ratio for UA has shot above 12. We like these surges
in short interest as they often build the foundation for a short squeeze.

Options traders can position for a potential Oscar-induced short-covering rally by buying the UA July 30 Calls (UA    100717C00030000) for
$3.30 or less.

Related Articles:

• Top 6 Picks for March
• 5 Ways to Tell a Stock is Headed Up
• How
  to Dodge the SEC’s New Short-Selling Restrictions

Are Your Investments Going to Fail You This Year?
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