Is China Dangdang ready for rebound?
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring system detected the purchase of January 5 calls for $1.20. Equal-sized blocks were sold in the January 4 puts for $1 and the January 8 calls for $0.45. Volume was above open interest in all three strikes, indicating a new position was begun.
The trader collected a credit of $0.25 and will earn an additional $3 if the Beijing-based online retailer closes at or above $8 on expiration. The position also stands to lose money below $3.75.
DANG gained 5.49 percent to close at $4.80 yesterday but has lost more than half its value in since the second week of April. The stock, which went public in late 2010, is attempting to hold the same level where it bounced in December. It's never traded below $4.
The company's last four earnings reports all missed estimates, and its margins have been deteriorating. (See researchLAB for more)
Overall option volume in DANG was more than 7 times greater than average in the session.