JD.com is drawing bullish option activity for the third time in less than two weeks.
optionMONSTER's Heat Seeker system detected the purchase of 3,000 May 31 calls in one print for $1.20 this morning. This is clearly a new position, as open interest in the strike was just 303 contracts before the trade appeared. This follows bullish call buying on March 19 and 24 .
Long calls lock in the price where investors can buy a stock, which lets them position for a rally with limited capital. That can be safer than purchasing shares directly because only the cost of the options can be lost on a pullback. The calls can be sold anytime before they expire but will lose value if the stock falls. (See our Education section)
JD is down 0.61 percent to $29.21 in early trade. The Chinese e-commerce company has been rising steadily since rebounding from the $23 level in mid-January with strong sales.
Total option volume is below its full-session average, but overall calls are outnumbering puts by 13 to 1.
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