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Option Brief: Groupon Inc (NASDAQ:GRPN) call volume finished at a 33% mark-up to its typical daily level yesterday, with roughly 37,000 contracts crossing the tape. The majority of that action was the result of a two-legged trade, which involved two out-of-the-money strikes.
Specifically, matching 11,000-contract blocks traded at GRPN's December 10.50 and 11 calls, which expire this Friday. The higher-strike calls crossed the tape at the bid price, and open interest fell by over 9,400 contracts overnight, indicating the positions were sold to close. Meanwhile, the lower-strike calls changed hands at the ask price, and open interest rose by over 11,500 contracts overnight, conveying new positions were initiated. Long story short, Monday's big GRPN trader appears to have rolled down his bullish bet.
Effectively, this means the speculator is no longer confident that Groupon -- which closed yesterday at $10.36 -- can topple $11 by week's end. Therefore, he sold the December 11 calls for $0.06 per contract, and purchased the December 10.50 calls for $0.19 each -- still anticipating a move higher, but less extreme.
On the charts, Groupon Inc (NASDAQ:GRPN) ran into a layer of resistance last week at the $10.50 level. The shares spent three sessions venturing north of the mark in intraday trading, only to close below it. At last check, GRPN is up 1.8% at $10.55 to test this area again.