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Wayfair attracts complex earnings play

optionMONSTER Staff (media-support-team@optionmonster.com)

A three-way trade is apparently looking for Wayfair to report positive quarterly results.

optionMONSTER's market detected the purchase of 3,750 August 45 calls for $2.30, the sale of 3,750 August 50 calls for $1, and the sale of 3,750 August 30 puts for $1 in the last hour of yesterday's session. Volume was above open interest in all three strikes, showing that this is new positioning that combines a vertical spread with short puts .

The call spread is looking for W to rally above $45 by expiration in mid-August. The sale of the higher-strike contracts reduces the cost of the long calls but limits potential gains, as the trader will be obligated to sell shares if they rise above $50.

The sale of the puts, meanwhile, reduces the cost of the bullish spread but obligates the trader to purchase shares if they fall below $30. The entire three-way strategy cost only $0.30. (See our Education section)

W fell 6.43 percent to $40.18 yesterday but is up 8 percent in the last month. The furniture and houseware e-commerce company reported mixed results on May 9 and is expected to report its next earnings numbers on Aug. 11, about a week before yesterday's trade expires.

Overall option volume in the name was 15 times greater than average yesterday.

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