How call spread is playing Deckers
Chris McKhann | [email protected]
optionMONSTER systems show that a trader bought 3,500 December 82.50 calls for $2.25, above the ask price, while selling 7,000 December 85 calls for $1.15. Previous open interest in the strikes were 33 and 66 contracts respectively, indicating that new positions were established.
This ratio spread takes in a credit of $0.05, which will be the profit if DECK remains below $82.50 through expiration in mid-December. The maximum gain would be realized with the stock right at $85 at that time. Above that level, the trader is effectively short shares. (See our Education section)
DECK rose 2.15 percent yesterday to close at $81.64 after hitting an intraday high of $83.04, both their highest levels since 2008. The footwear maker was below $60 a month ago.