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TD Ameritrade draws range play

Chris McKhann (chris.mckhann@optionmonster.com)

A large trader is betting that TD Ameritrade will remain range-bound through late summer.

optionMONSTER systems show that a trader sold 15,000 August 35 calls for the bid price of $1.25. This is clearly a new position, as open interest in the strike was only 243 contracts before the trade appeared.

A couple of minutes later, the session's biggest block of AMTD stock traded as 570,000 shares were bought for $33.2958. The combination of share and short calls creates an overall position that is delta-neutral , which means that the trader is looking for the stock to continue moving sideways and/or for its volatility to be lower than that implied by the options' price. (See our Education section)

AMTD fell 0.36 percent to $33.24 on Friday. The online brokerage bounced off support at $30 in early February and was up at $35 last week.

Disclosure: TD Ameritrade is a competitor of optionMONSTER's sister company, tradeMONSTER.

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