Someone is worried that Shutterfly might roll over.
optionMONSTER's Depth Charge tracking system detected the purchase
of about 1,900 August 52.50 puts for $1.40 and the sale of a
similar number of September 60 calls for $1.40. Volume was more
than 11 times the previous open interest at each strike, indicating
that new positions were initiated.
Buying puts locks in a minimum sale price on a stock, while selling
calls forces the investor to unload shares if they climb to a
certain level. Combining the trades two reins in profit to the
upside but limits the amount of money that can be lost in a major
selloff. It's often known as a
strategy. (See our
SFLY declined 1.02 percent to $55.58 on Friday but has more than
doubled since late last year. The photo-sharing service has been
rallying against heavy short interest and has benefited from rapid
sales growth. Quarterly results have also beaten estimates for at
least four straight quarters.
The unusual aspect of last week's collar is that it uses different
expiration months. The trader now has downside protection for the
next three weeks but remains short calls for an additional month.
This suggests that he or she is nervous about a drop when the next
set of numbers come out tomorrow afternoon.
Total option volume was 10 times greater than average in the
session, according to the Depth Charge.
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