Call traders show up to bid at Sotheby's
David Russell | email@example.com
optionMONSTER's Heat Seeker monitoring system detected the purchase of 1,349 May 39 calls for $1.10 and, at the same time, the sale of some 3,373 May 42 calls for $0.35. Volume was below open interest at the higher strike, so there are two possible explanations for the trade.
One is that the investor previously owned the 42s and rolled their position to the 39s, providing more leverage to a rally. Or the trader may have opened both legs, in which case the strategy is a version of a ratio spread. That would have cost about $0.22 per call contract owned and will earn a maximum profit of more than 1,200 percent if the stock closes at $43 on expiration. (See our Education section)
BID declined 4.94 percent to $37.17 yesterday. It's been fluctuating between $36 and $40 for the last three months, while building support above its 200-day moving average. The most recent earnings report on Feb. 29 missed expectations, but investors have remained hopeful that conditions will improve. The next release is scheduled for after the bell on Thursday, May 10.
Overall option volume in the stock was 6 times greater than average yesterday, with calls outnumbering puts by almost 10 to 1.