What's behind call spread in ADT
Chris McKhann | email@example.com
A trader bought 1,590 December 44 calls for $1.06 while selling 3,180 December 46 calls for $0.38, according to optionMONSTER's Heat Seeker tracking system. The volume at each strike was well above open interest at the beginning of the day, so this is a new ratio spread.
ADT is up 0.48 percent to $44.04 this afternoon. It opened at $42.38 after releasing earnings results yesterday and has been climbing since. Shares traded as high as $45 yesterday, a new high, but closed lower. The stock was down at a low of $35.38 in mid-October.
Today's call vertical spread cost the trader $0.30, which will be lost if ADT is below $44 at expiration. The maximum gain comes if the stock is right at $46, while the trader is essentially short shares above that price.