Sponsored By:

Archer Daniels Midland (ADM)

October 20, 2008

Dear Fellow Options Trader,

We first started seeing unusual options trading activity in Archer Daniels Midland (ADM) back on Oct. 7, specifically in the form of rapid-fire spreads being bought in the January calls. Well, just as little Heather O'Rourke said as she played the little girl (Carol Anne) in the "Poltergeist" films, "They're back!"

Today I show 7,500 of the ADM Jan 20 Calls being bought for $2.75 and 7,500 of the ADM Jan 30 Calls being sold for 50 cents for a net spend of $2.25 for that $10 spread.

Thus, someone plunked down another $1,687,500 for this spread and either added to, or traded along with, whomever bought those spreads 13 days ago when ADM was trading at $17. Today the stock traded up to $19.46, up $1.14.

Hey, we're not ones to argue with the smart money, especially when they keep putting more of it on the table! Thus, it's time to jump in on this bullish action by buying the ADM Jan 20 Calls (ADMAD) for $2.70 and selling the ADM Jan 25 Calls (ADMAE) against them for a credit of $1.10, for a total net pay of $1.60 for that $5 spread.

Remember, when you're buying a bull-call spread, the individual prices you pay (for the long "leg" of the spread) or collect (for the short leg) don't matter, as long as you don't pay more than $1.60 total to enter this trade.

Jon "Doctor J" Najarian
Editor
ChangeWave Options Trader