Ctrip.com International has been consolidating after a big
rally, and the bulls are piling in.
optionMONSTER's Heat Seeker monitoring system detected the
purchase of 3,308 February 50 calls for $2.65. An equal number of
February 55 calls was sold at the same time for $1.30, resulting
in a cost of $1.35.
Owning calls locks in the price where a stock can be bought,
while writing them obligates the investor to sell his or her
position if a certain level is reached. Combining the two
strategies lets them control a defined move, in this case from
$50 to $55.
Their position will inflate to $5 if the Chinese online travel
agency reaches the higher price, translating into profit of 270
A similar trade appeared on
in the January 55 and January 60 calls. See our
section for more on the strategy, which is known as a bullish
CTRP fell 7.02 percent to $45.94 in afternoon trading, but is up
97 percent in the last year. It's been rallying along with other
Chinese Internet companies
as increased travel on the Mainland fuels growth.
A more cautious trade appeared an hour after the bullish call
spread. This time the January 41 puts were sold and the January
60 calls were bought -- both against open interest -- while the
February 41 puts were bought and the February 60 calls were sold.
That indicates that a collar position was rolled forward in time
as an investor looks to guard a long position in the stock.
Over 46,000 contracts have traded in CTRP so far today. That's
more than 8 times average amounts, according to optionMONSTER
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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