Option traders apparently think that Groupon is due for a
optionMONSTER's Heat Seeker monitoring program detected heavy
upside activity in the online-deal company yesterday, even as the
broader market headed lower. First, they
about 10,000 May 7 calls for $0.89 to $0.90, more than doubling
previous open interest of 4,249 contracts.
Later in the morning, a trade purchased
a block of 3,000 July 8 calls for $0.58 and sold a matching number
of July 10 calls for $0.18. Known as a
bullish call spread
, that strategy will return 400 percent if the stock closes at $10
or higher on expiration in mid-July. (See our
GRPN declined 4.85 percent to $7.06 yesterday and is down 38
percent in the last three months. Much of that drop occurred on
Feb. 21 after management warned that it would sacrifice profit
margins to increase marketing. The company's next earnings report
is scheduled for May 6.
Total option volume was more than twice the daily average in the
session, with calls outnumbering puts by a bullish 5-to-1
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