Trinity Industries Inc (TRN)

[Enterprising Investor]

Ratio spread in Trinity Industries as a bullish play is extended (9/28/17)

By The Fly

Ratio spread in Trinity Industries (TRN) as a bullish play is extended. The stock up 16c to $31.06 and 7.4K Jan 40 calls sold at $2.40 to buy 15K Apr 32 calls for $2.30, tied to 275K shares. The $3.5M premium purchase in the April term is opening and the in-the-money Jan 30 calls likely cover positions opened earlier this year, including a 5K lot bought for $2.475 on 3/17/17 (stock ref. $27.14). Rolling the long calls to April and up two strikes, while increasing position size, expresses confidence that the rally will continue through the next two earnings cycles in mid-October and February.