Why bull is extending play on Sina
Sina has been ripping higher, and one investor is positioning
for the run to continue.
optionMONSTER's Heat Seeker tracking program detected the purchase of 5,600 November 55 calls, mostly for $2.40. At about the same time, 2,982 October 48 calls were sold for $4.90 against existing open interest, indicating an existing long position in the calls was rolled out by one month and to a higher strike price.
The trade let the investor recover about $1.2 million of capital while almost doubling the number of contracts they own. That's highly bullish move because it reflects a belief that SINA will climb past $55, and the trader wants to own more options for greater leverage from the rally.
The Chinese Internet company is up 0.73 percent to $51.50 in afternoon trading and has risen 23 percent in the last month. The last earnings report on Aug. 4 was better than expected as margins widened and advertising growth continued. Management also raised guidance.
The stock started lighting up the Heat Seeker last week, when traders piled into the October 48 calls for $1.15 to $1.35. The shares have edged higher by 10 percent to 15 percent since then, while the calls more than quadrupled in value.
Overall options volume in SINA is 9 times greater than average today, with calls accounting for 92 percent of the activity.
(Chart courtesy of tradeMONSTER)