Options Trading News

February 14, 2013  Thu 3:16 AM CT

One high roller is playing with the house's money in Melco Crown Entertainment.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 17,514 March 23 calls for $0.45. A matching number of March 21s were sold for $1 at the same time, but volume was below open interest at the strike. This suggests that an existing position was closed and rolled higher.

The investor collected a credit of $0.55 and stands to keep making money if the Macau casino operator continues to rally. Shares have already doubled in value since the summer.

The investor probably recovered their initial investment in the stock, leaving him or her free to risk only their winnings. (See our Education section for more on how options can be used to manage trades.)

MPEL rose 2.14 percent to $20.99 yesterday. The stock has been climbing steadily since mid-2010 as China's emerging upper class flock to the former Portuguese colony and as the company's properties come on line.

Some 43,400 options changed hands in the name yesterday, more than 5 times its average amount. Calls outnumbered puts by a bullish 62-to-1 ratio in the session, according to the Heat Seeker.
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The company, which has fallen along with other casino operators because of weakness in Macau, reported mixed quarterly results last Thursday.


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