Traders apparently think that Mercadolibre is on solid ground
despite a poor earnings report last week.
optionMONSTER's tracking programs detected the sale of about 2,000
December 72.50 puts for $1.90 to $2.10 yesterday. Volume was more
than 25 times open interest at the strike.
Those investors are now obligated to buy shares of the Latin
American Internet company for $72.50 if they close below that level
on expiration, creating the risk of losses if they fall into the
$60s or lower. But if MELI holds its ground above the strike price,
the puts will expire worthless and the credit will be kept as
MELI fell 2.15 percent to $75.48 yesterday. It has swung wildly
between $50 and $100 over the last year, though its range has
narrowed since the summer. Shares gapped higher in August following
a strong quarterly report but then dropped on Nov. 2 after profit
and revenue both missed expectations.
may like the company but may be willing to own shares only if they
drop to $72.50. Unlike buying the stock, they now stand to make
some money even if it never touches their level. (See our
section for more ideas on how options can be used to manage risk.)
More than 2,500 contracts traded in the name, almost triple the
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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