Shares in SolarCity (Ticker: SCTY) kicked off the trading session in negative territory, but were not in the red for long as the stock reversed course in early trading to stand up more than 1.0% at $56.20 by 10:30 a.m. ET. Big prints in regular May expiry call options on SCTY suggests one strategist may be positioning for the price of the underlying to rally significantly over the current level following the company’s first-quarter earnings report after the close on Wednesday.
It looks like a 6,065-lot 16May'14 $60/$65 call spread was purchased at a net premium of $0.77 per contract. The bull call spread starts making money if shares in SolarCity rally 8.0% over the current level to exceed the effective breakeven price of $60.77, with maximum possible profits of $4.23 per contract available in the event that SCTY shares jump nearly 16% to $65.00 by expiration. Shares last traded above $65.00 back on April 2nd.
Chart – SCTY 16May’14 $60/$65 call spread
