Ctrip.com International has been a monster, and traders are
looking for a breakout to new highs.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of 2,000 January 55 calls for $2.40 and the sale of an
equal number of January 60 calls for $1.40. That translates into
a cost of $1.
Volume was below open interest at the lower strike, so there are
two possible explanations for the trade. One is that both
positions were initiated, in which case it was a bullish call
spread with a maximum profit of 400 percent on a move to $60 or
higher by expiration.
Alternately, he or she may own shares in the Chinese online
travel agency and sold the January 55s as part of a covered-call
strategy. If that's the case, they rolled the position higher,
raising their eventual exit price by $5. (See our Education
Section for more.)
Either way the activity is highly bullish, looking for the shares
to trade north of $55 by early next year.
CTRP fell 1.70 percent to $46.08 in afternoon trading, but has
more than doubled so far this year. The company benefited from a
wave of enthusiasm toward Chinese Internet stocks earlier this
year, and has reported strong results for at least three straight
Total option volume is almost twice the average in the name so
far today, according to Heat Seeker. Calls outnumber puts by 32
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