Cree has been rampaging higher, and the bulls jumped in
optionMONSTER's tracking programs detected the purchase of some
5,000 December 62.50 calls for $8.65 and the sale of an equal
number of December 70 calls for $5.40. Volume was more than 5 times
open interest at both strikes, indicating that new positions were
lock in the price where the stock can be bought, while selling them
obligates the investor to unload shares if a certain level is
reached. The combination gives the investor control of the spread
between two prices at a low cost.
In this case, the trader paid $3.25 to open the
and will receive $7.50 if the stock closes at $70 on expiration.
That would be a profit of 131 percent on a move of less than 20
percent in the share price. (See our
section for more on how options can be used to generate leverage.)
CREE rose 0.94 percent to $60.41 yesterday and has rallied more
than 75 percent since the beginning of 2013. The company is a
member of the light-emitting diodes industry, a small but
fast-growing niche within the technology sector.
Total option volume was 7 times greater than average in the
session, with calls accounting for more than three-quarters of the
(A version of this post appeared on
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