How one bull is playing HHGregg
Mike Yamamoto | firstname.lastname@example.org
optionMONSTER's Heat Seeker system detected the sale of 4,000 March 10 calls for the bid price of $1.20 and, seconds later, the purchase of 5,000 March 12 calls for the ask price of $0.45. The March 10 print was below previous open interest while the March 12s were above it, indicating that a long position was rolled higher.
The trader is closing the lower-strike contracts, taking some money off the table and using the rest of the proceeds to open a position at a strike that is $2 higher. The new long calls, which lock in the price where the stock can be bought, are betting that HGG will rally above $12 by expiration in 3-1/2 weeks. (See our Education section)
The initial calls were apparently purchased just one session earlier, as our systems found heavy buying in the March 10 strike on Monday. Those contracts went for $0.50 to $1 at the time, so the trader sold his or her calls for a profit of at least 20 percent yesterday.
HGG rose 3.54 percent yesterday to close at $10.54, adding to a gain of 5 percent in the previous session. The stock has been rebounding since hitting a low of $7.23 on Feb. 6, its worst price since January 2009.
Overall option volume in HGG was just shy of 14,000 yesterday, nearly 5 times its daily average for the last month. Overall calls outnumbered puts by 14 to 1.