Market News

October 12, 2016  Wed 5:47 AM CT

A large trader apparently believes that upside potential will be limited in JD.com through early next year.

optionMONSTER's market scanners show that 5,250 January 28 calls were sold in one print for $1.54 yesterday. This is clearly a new position, as volume surpassed the strike's open interest of 2,179 contracts.

Short calls generate income and lock in the price where a stock must be sold. The trade is usually done in conjunction with long shares in a covered-call strategy, reflecting a belief that gains will be limited through expiration. (See our Education section)

JD fell 2.01 percent to $26.75 yesterday but is up 23 percent in the last three months. The Chinese e-commerce company is expected to report earnings before the market opens on Nov. 14.

Overall option volume was about average in JD yesterday.

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