How call spread is playing Under Armour

optionMONSTER

Under Armour in the middle of its recent range, and one trader sees limited gains in the next two months.

optionMONSTER systems show that a trader bought 5,000 June 57.50 calls for the ask price of $1.90 and sold 10,000 June 60 calls for their bid price of $0.90. The open interest at each strike was under 200 contracts before the session began, so this is a new vertical spread .

The position cost the trader just $0.10 to open, plus the margin requirements on the additional June 60 short calls in this ratio spread. That small debit is the maximum loss if shares remain below $57.50 through expiration. The maximum gain would be realized if the stock were right at $60, and above that the trader is effectively short shares. (See our Education section)

UA is up fractionally to $55.98. The athletic-apparel retailer has bounced between $54.50 and $58 for the last few weeks. It traded up into this range after bouncing off support at $46 several times since the beginning of 2013.

More than 15,000 UA options have changed hands so far, compared to a daily average of 2,000 in the last month.


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