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Options Trading News

June 27, 2014  Fri 5:16 AM CT

YOKU: SEE CHART GET CHAIN FIND STRATEGIES
Youku Tudou jumped yesterday, and traders piled into the name for the second time in as many weeks.

optionMONSTER's Heat Seeker system detected the purchase of about 3,700 August 27 calls for $0.75 in the session. There was no open interest before the trades appeared, which indicates that this is fresh buying.

Several other strikes expiring the next two months saw bullish activity as well. The trades followed call buying in the July 20 contracts about two weeks ago.

Long calls lock in the price where the stock can be purchased no matter how far it might climb. They could be sold before expiration at a profit if premiums rise with a rally, providing potentially significant leverage, but the contracts can quickly lose value if shares stall or pull back. (See our Education section)

YOKU rose 4.37 percent to $22.95 yesterday. The Chinese video-streaming company got hammered on May 23 after its last earnings report but found support around $19 and has been working higher this month. Short interest is more than 10 percent of the float.

Overall option volume in Youku yesterday was 6 times its daily average for the last month, with calls accounting for a bullish 81 percent of the total.

Disclosure: I own YOKU shares.

(A version of this post appeared on InsideOptions Pro yesterday.)
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