Learn the trade here. Make it on tradeMONSTER

Options Trading News

August 30, 2013  Fri 1:33 PM CT

CTRP: SEE CHART GET CHAIN FIND STRATEGIES

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

CTRP

Call buyers hope to fly with Ctrip.com

August 29, 2014

The Chinese online travel agency has pulled back since hitting an all-time high earlier this month, but shares are now trying to bounce off their 50-day moving average.

CTRP

Time is money for Ctrip trader

August 8, 2014

An investor is selling puts well out of the money, betting that the Chinese travel agency will hold its ground all next year.

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Education & Strategy

It's all skewed up

Most new option traders know little about implied volatility, and learn the hard way. Today we want to help you...

View more education articles »
optionMONSTER stockMONSTER tradeMONSTER