Call Spread Purchased on Dollar Tree (DLTR)

Shares of Dollar Tree (DLTR) are trading lower on the session by 0.27%, at $39.25. The stock has been running lower over the past two weeks after the company issued a cautious tone for it’s Q3 earnings, which are scheduled to be released on November 15^th.

One trader is taking advantage of the weakness in DLTR by buying upside call spreads. A short while ago the November $42.50/43.75 call spread was purchased 5,000 times for between $0.24-0.25.

Given current open interest on both strikes, 1,179 and 1,256 contracts respectively, this is clearly new positioning.

30-day implied volatility is up 2.4% today to 34.91%; 10-day historical vol is holding steady at 51.59%.

Dollar Tree, Inc. is an operator of discount variety stores offering merchandise at the fixed price. As of January 28, 2012, the Company operated 4,351 discount variety retail stores.

About Michael Zerinskas

Originally from Chicago, Michael J. Zerinskas began his career as an intern for a small high-frequency trading firm based at the CME; he then moved on to become Chief Options Strategist at Benzinga.com. Michael is now Unusual Activity Editor at The Options Insider, specializing in VIX, volatility, and flagging unusual activity.