Trader getting ready to run with Deckers
Chris McKhann | email@example.com
DECK is up 2.16 percent to $47.20 after hitting a two-year closing low of $40.22 at the start of this month. The shoe maker has filled a downward gap that opened in late July but is still less than half of its all-time high of $118.90 reached at the end of October.
optionMONSTER's Heat Seeker system shows that a trader sold 3,000 September 42.50 calls for the bid price of $5 against open interest of 7,334 contracts. Seconds later, he or she bought 3,000 September 47.50 calls for $2.30 at volume that was almost 3 times the open interest at that strike.
The trader could be establishing a credit spread, looking to collect premium as profit if DECK remains below $42.50 at expiration. But it is far more likely that the trader is rolling a long position higher, selling the lower strike to close that position and buying the higher strike.
This would allow them trader to take profits off the table while maintaining exposure to a further run higher. (See our Education section)