Options Trading News

May 24, 2013  Fri 4:14 AM CT

Weak numbers from China yesterday brought out the bears in casino operator Melco Crown Entertainment.

optionMONSTER's Depth Charge monitoring program detected the purchase of some 9,600 Weekly 23 puts expiring next Friday, May 31, for $0.35. A similar number of May 24 calls were sold around the same time for about $0.28. There was no open interest at either strike, indicating that new positions were initiated.

Known as a collar, the trade cost about $0.07 and establishes a $23 minimum-selling price for the stock. The investor is also obligated to sell shares for $24 if they close above that level on expiration, so they're probably using it to protect a long position in the name. (See our Education section.)

MPEL dropped 4.71 percent to $23.26 yesterday after the HSBC purchasing managers index showed contraction in China's manufacturing sector for the first time in seven months. Investors likely have profits to hedge, as the Macau-based company had more than doubled since last summer.

Total option volume was 7 times greater than average in the session, according to the Depth Charge.
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