Bulls prepare to open Pandora's box

By David Russell,

Shutterstock photo

Pandora Media exploded higher last week, and one investor is looking for the rally to intensify.

optionMONSTER's Heat Seeker tracking program detected the purchase of 5,000 December 17 calls for $0.40. A block of 1,500 September 10 calls were sold at the same time for $2.10, resulting in a net credit of $115,000.

Volume was below open interest in September, so it appears that the investor previously owned those September calls and had made money from Pandora's recent move. He or she then closed the position and rolled it to the higher strike expiring three months later. The number of contracts was tripled in the process, which will increase leverage --but only in the event of a big rally. (See our Education section)

P finished unchanged at $12.27 yesterday but is up more than 20 percent in the last week. Most of that move occurred on Aug. 30, when earnings and revenue beat expectations. The online music company also raised guidance as its advertising business continues to gain traction.

Calls outnumbered puts by a bullish 3-to-1 ratio in the session, according to the Heat Seeker.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: P

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