Bulls sticking with Deutsche Bank


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Deutsche Bank has been screaming higher, and the bulls aren't done with the stock yet.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,000 May 48 calls for $0.95 and the sale of an equal number of May 48 puts for $1.25. Volume is more than 7 times the previous open interest at each strike, clearly showing that this is new activity.

The resulting position is highly leveraged to the German financial giant, with both the long calls and short puts correlated to the stock price. The investor collected a credit of $0.30 from opening the trade and now stands to earn infinite profits if it climbs above $48 over the next two weeks.

Below that level, he or she must buy stock for $48. The trade is unusual because the trader sold puts that are slightly in the money to obtain significant leverage. (See our Education section)

DB is up 2.2 percent to $47.90. The stock is up 22 percent in the last month as its low price-to-book ratio draws interest with an improving financial situation in Europe. (See our special report on European banks from last month.)

Total option volume is twice the daily average in DB so far today. The Heat Seeker also detected buying in the May 42 calls for $0.80 two weeks ago , and those contracts have now appreciated by more than 600 percent.

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

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