Melco Crown has rallied hard, and now the option action is
Our Depth Charge monitoring program detected the purchase of 6,200
February 18 puts for $0.66 and the sale of an equal number of
February 20 calls for about $0.39. Volume was more than 15 times
the previous open interest at each strike.
The trade cost $0.27 and will make money if the Macau casino
operator pushes lower in the next five weeks. It ensures an
effective minimum selling price of $17.73 and a maximum of $19.73
because the short calls force the investor to unload shares if they
go above $20.
The investor probably wants to protect a winning position in the
stock and is willing to exit at a higher price. This strategy is
known as a
. (See our
MPEL is down 1.57 percent to $18.76 in afternoon trading but is up
39 percent in the last three months. The stock is now back near its
highest level in almost six years, which could be leading some
traders to expect a pause or a pullback.
Total option volume is quadruple the daily average so far in the
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