Groupon bulls looking for a bounce

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Option traders apparently think that Groupon is due for a bounce.

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 bought 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 Education section)

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 ratio.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: GRPN

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