Pandora has fallen to its lowest level since the beginning of the year, but an enormous call spread is looking for a rebound in the online-radio service.
optionMONSTER's Heat Seeker system shows that a block of 21,676 May 31 calls was bought for $0.90 as the same number of May 35 calls were sold for the bid price of $0.35.
This bullish vertical spread cost the trader $0.55, which is the maximum amount that can be lost if the stock remains below $31. The maximum gain of $3.45 would be realized if shares rise above $35 by expiration in mid-May. The position caps the trade's upside potential but also limits the amount of money at risk, because the sale of the higher-strike contracts reduces the cost of the calls purchased . (See our Education section)
P fell another 1.41 or 4.96 percent to $26.99, just below its 200-day moving average and its lowest close since the first day of 2014. It was off the session's low but added to losses of the previous two days.
The total option volume in P was 134,000 contracts, 7 times its daily average for the last month.
More From optionMONSTER