Bulls go in the money on Dangdang


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E-Commerce China Dangdang got some in-the-money love on Friday.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 8,800 April 7 calls against open interest of just 2,271 contracts. Premiums rose from $1 to $1.30 over the course of the session.

Those calls lock in the price investors must pay to own shares in the online Chinese book seller and can generate significant leverage in the event of a rally. They're considered in the money because the strike price is below the current value of the stock price. (See our Education section)

DANG rose 7.86 percent to $8.10 but is down more than 50 percent in the last year. The company was aggressively sold along with other Chinese names last year amid worries about their accounting, leaving it with a short interest that's more than 20 percent of the float. That could fuel buying in the stock.

Overall option volume was 5 times greater than average in the session, with calls outnumbering puts by 9 to 1.

(A version of this post appeared on InsideOptions Pro on Friday.)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Options

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