Traders are rolling the dice with Melco Crown Entertainment,
looking for the Chinese casino stock to rally back from today's
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 4,250 November 34 calls for $1.40. Equal-sized blocks
were sold around the same time in the November 31 puts for $0.45
and the November 38 calls for $0.25. Volume was more than triple
open interest in all three strikes, indicating that new positions
The investor paid $0.70 and will collect $4 if the stock closes at
or above $38 on expiration 3-1/2 weeks from now--potential profit
of 471 percent. He or she also faces the risk of additional losses
on a drop below $31 because they sold puts. (See our
section for more on
and short puts.)
MPEL is down 4.01 percent to $33.50 in midday trading but is up 44
percent in the last six months. It's been running hard as earnings
and revenue grow sharply. The next quarterly report will probably
occur early next month but the timing hasn't been announced yet. A
good set of numbers could turn today's bullish trade into a huge
The stock also peaked at $31 in September before bouncing at it
this month, which could make some traders comfortable writing puts
at that level.
Total option volume is 5 times greater than average in MPEL so far
today, 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.
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