Options Trading News

November 15, 2013  Fri 3:16 AM CT

A call spread is looking for Children's Place to break out of its recent range.

Just shy of 8,000 PLCE options changed hands in total yesterday, compared to an average daily volume of  less than 1,000. A trader bought 1,750 December 55 calls for the ask price of $2.20 and, seconds later, sold 3,500 December 60 calls for the bid price of $0.65.

This ratio spread cost the trader just $0.90, which is the most that can be lost if PLCE remains below $50. The maximum gain comes if the stock is right at $60 upon expiration in mid-December but, above that, the trader is effectively short shares. (See our Education section)

PLCE was almost 1 percent yesterday to close at $54.49, in the middle of its recent range. The children's apparel retailer was up at $56 at the end of October and at resistance at $58 at the start of that month.
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