Options Trading News

January 4, 2013  Fri 4:14 AM CT

Melco Crown Entertainment has been a monstrous run, and traders are upping the ante.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 11,300 April 18 calls for $1.42 and the sale of 9,525 January 17 calls for $0.87. Volume was below open interest in the January contracts, indicating that an existing long position was closed and rolled to the higher strike.

The transaction cost about $776,000 and increases the investor's upside exposure to the high-flying Chinese casino stock, which is already up 17 percent in the last month. Not only did this trader increase the number of contracts owned, but he or she also put more money on the table--the opposite of quitting when ahead.

MPEL rose 3.23 percent to $17.92 yesterday. Its January 15 calls lit up the Heat Seeker back on Dec. 4 for $0.55, and the stock has been rallying ever since. Those January contracts have inflated by more than 400 percent during that period.

The shares have been climbing as sentiment toward China improves and got a boost this week after it was reported that Macau casino revenue surged 20 percent in December.

Total option volume was 11 times greater than average in MPEL, with calls outnumbering puts by a bullish 29-to-1 ratio.
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