U.S. Markets closed

Trader bets the house on TD Ameritrade

David Russell (david.russell@optionmonster.com)

One investor is betting big on the bull market with a massive upside trade in broker TD Ameritrade.

optionMONSTER's Heat Seeker tracking system detected the purchase of 23,550 January 2015 25 calls for $2.97. Equal-sized blocks were sold in the January 2015 18 puts for $1.32 and the January 2015 30 calls for $1.32. There was barely any open interest at those strikes before the transaction appeared, indicating that new positions were initiated.

The strategy is highly bullish, combining short puts with a vertical spread to minimize cost and maximize leverage. It cost $0.33 to implement and will expand to $5 if AMTD closes at or above $30 on expiration, implying potential profit of 1,415 percent if such a move occurs. The trader also faces potential losses because of the short puts. (See our Education Section.)

AMTD is down 0.5 percent to $23.83 in afternoon trading but is already up 42 percent so far this year. It's been screaming higher along with other trading-related names such as Charles Schwab and CBOE as awareness spreads of the emerging bull market in equities.

The stock has also been consolidating above the $23 level that's held it in check since 2006. That could make some chart watchers think that it will keep running as resistance becomes support.

Total option volume is more than 22 times greater than average in AMTD so far today, according to the Heat Seeker.

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

More From optionMONSTER