Your Opinion is invited

[luo8888]

Recently, I noticed a very "strange" option trade:

Stock price was at $33 and had been around that price for a while, one day a huge volume of calls (leap) was traded:

58,000 call contracts with strike: $45; exp: Jan'08, traded at $0.8 per contract

This is a small cap company, thinnly traded for a long time. This kind of call volume so far out is some serious investment. My question is:

What is the intention behind this trade? And what is the logic or expectation behind this trade? How can this trade be profitable?

Please advise!

 

[athos]

Recently, I noticed a very "strange" option trade:

Stock price was at $33 and had been around that price for a while, one day a huge volume of calls (leap) was traded:

58,000 call contracts with strike: $45; exp: Jan'08, traded at $0.8 per contract

This is a small cap company, thinnly traded for a long time. This kind of call volume so far out is some serious investment. My question is:

What is the intention behind this trade? And what is the logic or expectation behind this trade? How can this trade be profitable?

Please advise!

It's difficult to determine intent behind any options trade. This customer could be making a very extensive long-term bet on the stock, they could be legging into a sizable time spread or some other trade. The problem with determining intent is that you have no idea what else this customer has on, so you really have no idea what he's doing. You can probably rule out insider info, though, since he would probably have bought short-term calls if he was trying to take advantage of inside info.