Adjusted Cree bet keeps hope alive
David Russell | firstname.lastname@example.org
optionMONSTER's Heat Seeker tracking system detected unusual call volume in the maker of light-emitting diodes, which is up 36 percent in the last six months. Some 5,000 January 35s were sold for $0.05 against previous open interest, indicating that an existing long position was closed.
Hardly a minute later, about 4,700 February 35 calls were bought for $0.65. Given their similar size and timing, it appears the investor closed an existing position in the January contracts and rolled it forward in time. He or she now has an additional month to profit from a rally in the share price.
CREE fell 0.78 percent to $31.81 yesterday. The stock peaked over $80 in April 2010 before retreating all the way to $20 by late 2011. It's been climbing since then as quarterly results start to improve.
The next earnings report is scheduled for Jan. 22 after the bell, so yesterday's trade adjustment allowed the investor to remain long through that release. (See our Education section for more on how options can be used to manage portfolio positions.)
Almost 16,000 contracts traded in the session, more than triple the daily average, according to the Heat Seeker. Calls accounted for a bullish 86 percent of the total.