Buyers rolling the dice for Melco Crown
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 19,000 January 15 calls, most of which priced for $0.55. Volume was almost quadruple previous open interest at the strike.
Those long calls lock in a price of $15 on the Macau-based casino company in the next 1-1/2 months, no matter how high the stock goes. They could generate tremendous leverage in a rally but will expire worthless if shares don't reach the strike price. (See our Education section)
MPEL declined 7.71 percent to $14.19 yesterday but is up 20 percent in the last three months. Yesterday's drop brought the shares back to their 50-day moving average, which could have led traders believe that the price was at a good entry point.
Total option volume was 16 times greater than average in the session, according to the Heat Seeker. Calls outnumbering puts by a bullish 9-to-1 ratio.