Options Trading News

June 18, 2013  Tue 4:45 AM CT

Dollar Tree has been climbing, and one trader thinks the trend will continue.

optionMONSTER's Heat Seeker monitoring system detected the purchase of 1,970 July 52.50 calls for $0.65 and the sale of an equal number of June 50 calls for $0.60. Volume was below open interest in the 50s, indicating that an existing position was closed and rolled to the higher strike.

The trade cost $0.05 and provides the investor an additional month of upside exposure to the discount retailer. Adjusting the position now prevented him or her from losing money to time decay in the June contracts as expiration approaches on Friday. (See our Education section)

DLTR rose 2.08 percent to $50.14 yesterday and is up 24 percent so far this year. The last two earnings reports have beaten expectations, but the shares have been stalling along with the broader market in the last month. That could make some traders think they will need more time before rallying again.

Total option volume was 5 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by almost 10 to 1.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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