Ratio call spreads in Ebay ahead of earnings
Ratio call spreads in Ebay ahead of earnings. The stock up 41c to $34.13 and 10K Apr 30 calls sold at $4.70 to buy 15K Apr 35 calls for $1.50. Apr 30 calls are $4.13 in-the-money and represent the largest open interest block in Ebay, with 41.2K open. Therefore, the sale today probably closes some positions opened in November or December (notable buying on 12/21 for $1.28 to 1.48 with shares $26.40) and now a new position opened in upside Apr 35 calls. In other words, long calls rolled up five strikes to OTM from ITM, while increasing position size, and the vote of confidence comes ahead of a profit report tomorrow afternoon. Shares saw a large move in the year earlier period, gaining 13.8% to $46.19 on 2/1/18 - average daily earnings move over the past eight quarters is 6%.