Bet on continued rally though May, 2020.
Nearly 4,000 contracts traded on the May 2020 $15 call options on
Seaspan Corporation (SSW). Compared to the prior open interest of 553 contracts, it’s a seven-fold surge in volume.
Shares trade in the low $13 range, meaning they need to move $2 higher, or about 15 percent, before expiration in May to close in-the-money.
The option price of around $0.50, or $50 per contract, means the buyer starts to make money if shares hit $15.50.
Seaspan is an independent charter owner and manager of container ships based out of Hong Kong, operating a fleet of 119 ships.
Action to take: Shares of the company have rallied nearly 37 percent in the past year, even as global trade has seen a decline. The company has managed to maintain a massive 38 percent profit margin as well, making for a great long-term holding. With shares near a 52-week high, they’re still work buying up to $14 for a continued rally.
For speculators, we like the May call option trade. It’s a perfect play on trade war fears declining. And while Hong Kong stocks have suffered from the massive protests there, any improvement in conditions there could likewise create a rally. And given how cheap the trade is, the leveraged effects of the options trade could lead to great returns on the options trade.