Options Trading News

April 30, 2013  Tue 4:45 AM CT

A large call spread is looking for a moderate pop in shares of Bed Bath & Beyond.

A trader bought 9,200 June 70 calls for the ask price of $1.63 and sold 18,400 June 72.50 calls for the bid price of $0.75, according to optionMONSTER systems. This is new positioning, as the previous open interest at each strike was below 200 contracts.

This bullish vertical spread cost the trader just $0.13, which is the amount at risk if shares remain below $70 through expiration mid-June. The maximum gain would come with BBBY right around $72.50, but above that level the trader is effectively short shares. The trade is also known as a ratio spread because one strike has twice as many contracts as the other. (See our Education section)

BBBY gained 1.94 percent yesterday to close at $68.39 after reaching a high of $69.33 earlier in the session. Those are the stock's highest levels since mid-September. Shares home-products retailer were below $57 at the start of March.

More than 33,000 BBBY options changed hands on the day, compared to a daily average of 4,800 contracts.
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