Market News

November 23, 2016  Wed 8:02 AM CT

An investor extended a large bullish position in Dollar Tree Stores yesterday after the company reported positive quarterly results.

OptionMonster's monitoring program shows that 12,516 January 90 calls were sold for $2.55 while 12,516 February 92.50 calls were purchased for $2.35 yesterday. Volume was below open interest in the January contracts, indicating that a bullish position was rolled to a higher strike one month later.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

DLTR rose 8.16 percent to $88.68 yesterday but is down 14 percent in the last three months. The discount retailer beat earnings estimates on strong margins and provided positive guidance before the market opened yesterday morning.

Overall option volume was 8 times greater than average in the name yesterday. Calls outnumbered puts by a bullish 6-to-1 ratio.

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