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Call spread looks for more SPY gains

Chris McKhann (chris.mckhann@optionmonster.com)

The SPDR S&P 500 Fund is hitting new multi-year highs again today, and one trader is looking for a bit more upside.

The biggest trade of the day in the SPY exchange-traded fund comes in the form of a May call spread. optionMONSTER's Heat Seeker system shows that a trader bought 13,750 May 157 calls for $1.30 and sold 27,500 May 163 calls for $0.24. The volume at each strike was above the previous open interest, indicating new activity.

This vertical spread , which is also a ratio spread because of the differing number of contracts, cost $0.82 to open. That is the amount at risk if the SPY remains below $157, while the maximum gain comes if it is right around $163. If the fund rises above that higher strike price, the trader faces the obligation to sell shares. (See our Education section)

The SPY up fractionally today at $151.90, a new five-year high.

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