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June 18, 2013  Tue 4:45 AM CT

DLTR: SEE CHART GET CHAIN FIND STRATEGIES
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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Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

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