Traders shake profits from Dollar Tree

By David Russell,

Shutterstock photo

Dollar Tree is at a new all-time high, and investors are taking profits.

optionMONSTER's tracking systems detected the sale of more than 2,800 November 85 calls for $1.80 to $1.85. Volume was 9 times greater than open interest in the strike.

The trader probably owns shares in the discount retailer and wrote the contracts to earn income while holding the position. That reduces their cost basis and thus reduces their risk of loss if the shares were to drop. It also obligates them to sell DLTR for $85 if it closes at or above that level on expiration. But including the premium earned, their exit price would be $86.80-$86.85. (See our Education section)

DLTR is up 1.41 percent to $80.42 and is up 44 percent so far this year. It's been riding a wave of strong demand and investor enthusiasm, especially after rival 99 Cents Only Stores agreed to a buyout today.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

This article appears in: Investing Options
Referenced Stocks: DLTR

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