Forget about the woodshed. Dollar Tree has been getting
The discount retailer had been a steady performer since early 2008,
rallying more than 500 percent as cash-strapped consumers looked
for lower prices. But it's been falling since June, and is down
around $39 from the all-time highs over $56.
On Friday, however, the bulls started looking for a rebound.
optionMONSTER's monitoring programs showed the purchase of about
5,000 November 42.50 calls for $0.53 and the sale of an equal
number of November 43.75 calls for $0.28.
Owning calls locks in where investors can buy shares, while selling
calls obligates them to sell if the strike price is reached. In the
case of Friday's strategy, known as a
bullish call spread
, the trader would buy DLTR for $42.50 and sell the stock for
$43.75--a spread of $1.25. It only cost $0.25 to open, so the
trader would be looking at a profit of 400 percent if the shares
close at or above $43.75 on expiration. (See our
DLTR fell 0.51 percent to end the session at $39.15. Total option
volume in the name was quadruple its daily average, with calls
outnumbering puts by more than 7 to 1.
(A version of this post appeared on
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