eBay has been hammered along with other Nasdaq stocks, but some
investors are hoping that it could be the next Yahoo.
optionMONSTER's Heat Seeker monitoring program has detected bullish
activity in the last two sessions as investors focus on potential
catalysts that could light a fire under the slow-moving e-commerce
EBAY drew a vertical spread in the May 55 and 60 calls, with the
potential to earn profit of more than 300 percent if the stock
closes at $60 or higher by expiration. It's already inflated about
40 percent so far.
EBAY traded a lot like YHOO did in most of 2012, shuffling in a
range before CEO Marissa Meyer spurred a rally by seeking to
monetize its undervalued investment in Alibaba. EBAY, for its part,
owns the fast-growing PayPal business, which activist investor Carl
Icahn wants to see spun off into a new company. Management has
rebuffed his demands so far.
EBAY is up 0.97 percent to $55.33 in afternoon trading, on the
heels of a 3.5 percent gain yesterday. The online auction giant
rallied hard in February after on the Icahn news but then retreated
in March as investors dumped former high-flying Nasdaq stocks like
YHOO and Netflix.com. The online auction stock is now trying to
bounce around the middle of the same range where it traded all of
Today's option activity remains aggressively bullish. This time
traders bought about 8,300 May 57.50 calls for about $1.34. Some
3,600 of those were matched against May 52.50 puts that were sold
for $0.91, as investors created synthetic long positions with the
potential for significant leverage if EBAY continues higher. But
those short puts also pose substantial risk, as traders will be
obligated to buy shares if they fall below $52.50. (See our
More than 67,000 contracts have changed hands in EBAY so far today,
2.5 times its daily average for the last month. Overaall calls
outnumber puts by a bullish 7-to-1 ratio, according to
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