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Strategy bets on quick move in Yelp

David Russell (david.russell@optionmonster.com)

One investor wants to lever a quick move in Yelp.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 2,100 June 31 calls for $0.63 and the sale of an equal number of June 33 calls for $0.18. Volume exceeded open interest at each strike, indicating that new positions were initiated.

This vertical spread gives the investor the right to collect $2 if the social-media stock closes at or above $33 on expiration two weeks from now. Based on the $0.45 entry price, that would be a profit of 344 percent despite the shares climbing just 10 percent. (See our Education section for more on how to generate leverage with options.)

YELP rose 3.51 percent to $30.11 on Friday and is up 60 percent so far this year. It gapped higher on a strong earnings report early last month, pulled back, and is now rebounding after finding support at its old peaks and its 50-day moving average.

Total option volume was almost twice the daily average in the session, according to the Heat Seeker. Calls outnumbered puts by a bullish 16-to-1 ratio.

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