One investor is betting that Electronic Arts isn't done rallying
optionMONSTER's Heat Seeker monitoring system detected the purchase
of about 8,000 September 20 calls for roughly $1.02 and the sale of
5,000 September 17 puts for $1.70. Volume was more than 6 times the
previous open interest at each strike, indicating that new
positions were implemented.
The trader collected a credit of about $34,000 and stands to earn
huge profits if the video-game maker rallies to $20. He or she will
also be required to buy shares for $17 if they drop to that level.
The unusual aspect of the strategy is that
more calls were bought
than the number of
, providing greater leverage to the upside. The position will
benefit from a dramatic move higher while allowing him or her to
get long on a pullback, reflecting a strongly bullish opinion of
the stock. (See our
section for more on how options can be used to express a wide range
EA is up fractionally at $17.50 in afternoon trading but has risen
21 percent so far this year. Sentiment toward the name had been
bearish for years amid falling sales of traditional games, but the
company has recently been transitioning to an online business
Today's option strategy will keep the trader in the game well into
the second half, even if the shares take an extended pause. Total
option volume in EA is triple the daily average so far today,
according to the Heat Seeker.
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