Ubiquiti Networks fell sharply on weak guidance early this month, but a large call spread is looking for the stock to recover some its losses.
A trader bought 4,000 June 36 calls for the ask price of $1 and sold 4,000 June 38 calls for $0.50 on Friday, according to optionMONSTER's Heat Seeker tracking system. Volume was roughly 10 times the previous open interest in each strike, clearly showing that this is new positioning.
The trader spent $0.50 on the vertical spread , which is the maximum potential loss. The spread can make a $1.50 profit if UBNT is above $38 at expiration. (See our Education section)
UBNT was up 1.01 percent on Friday to close at $34.17. The communication technology company, which went public in October 2011, posted an all-time high of $56.86 in March but then pulled back and gapped down to the $31 level on May 9 after issuing a disappointing outlook. Short interest in the name is estimated at 23 percent of the float.
Total option volume in Ubiquiti just shy of 10,000 on Friday, 5 times its daily average for the last month. Only 281 of those contracts were puts.
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