Options News
Bullish bets pay off in $MLCO
Upside option traders have tripled their money in Melco Crown. On Nov. 7, Investitute’s tracking systems cited the purchase of 2,400 18April $22 calls for $0.73 as part of a bullish roll with shares at $17.69. This was clearly a new position, as above open interest of 248 contracts, 2,400 January 20.68 calls sold for […]
Upside option traders have tripled their money in Melco Crown.
On Nov. 7, Investitute’s tracking systems cited the purchase of 2,400 18April $22 calls for $0.73 as part of a bullish roll with shares at $17.69. This was clearly a new position, as above open interest of 248 contracts, 2,400 January 20.68 calls sold for 0.45 below open interest of 5,817. Stock 17.69.
Those calls traded for $2.37 today, more than 3.5 times their purchase price. The stock rallied 33.52% in the same time period, a large move but nowhere near that of its options on a relative basis.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
MLCO climbed to $24.08 early this morning before pulling back to finish the session down 3.58% at $22.87. The Hong Kong-based casino operator beat quarterly estimates on Feb. 19.