Short-term bears target Melco Crown
David Russell | [email protected]
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.