Options Trading News

August 30, 2013  Fri 1:33 PM CT


Ctrip.com International has been a monster, and traders are looking for a breakout to new highs.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 January 55 calls for $2.40 and the sale of an equal number of January 60 calls for $1.40. That translates into a cost of $1.

Volume was below open interest at the lower strike, so there are two possible explanations for the trade. One is that both positions were initiated, in which case it was a bullish call spread with a maximum profit of 400 percent on a move to $60 or higher by expiration.

Alternately, he or she may own shares in the Chinese online travel agency and sold the January 55s as part of a covered-call strategy. If that's the case, they rolled the position higher, raising their eventual exit price by $5. (See our Education Section for more.)

Either way the activity is highly bullish, looking for the shares to trade north of $55 by early next year.

CTRP fell 1.70 percent to $46.08 in afternoon trading, but has more than doubled so far this year. The company benefited from a wave of enthusiasm toward Chinese Internet stocks earlier this year, and has reported strong results for at least three straight quarters.

Total option volume is almost twice the average in the name so far today, according to Heat Seeker. Calls outnumber puts by 32 to 1.

Share this article with your friends

Related Stories


Momentum bulls ride Ctrip.com

November 25, 2015

The Shanghai-based online travel agency gapped up after reporting bullish quarterly numbers last Thursday, and a large trade is looking for more gains.


Bulls book tickets on Ctrip.com

November 2, 2015

Shanghai-based online travel agency has beaten earnings and revenue expectations for the last five quarters, and traders are looking for more gains.


Premium Services

Education & Strategy

The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

View more education articles »