By David Russell of OptionMonster
NEW YORK -- Youku Tudou (YOKU) gapped higher after reporting earnings at the end of last week, and now the bulls are looking for more.
OptionMonster's tracking systems detected steady buying in the December 34 calls, where more than 9,200 contracts traded for 85 cents to $1.40. The volume was well above the strike's previous open interest of 5,465, indicating that new positions were initiated.
These long calls lock in the price where traders can buy the stock for the next five weeks no matter how far it might climb. The contracts can provide significant leverage in a rally but will expire worthless if shares remain below $34.
Youku shares were up 2.56% to close at $30.05 Monday. The streaming-video company, China's version of Netflix, hit a new 52-week high of $31.77 earlier in the session but fell when the rest of the broader market sold off.
Total option volume topped 33,600 contracts Monday, six times its daily average for the last month. Overall calls outnumbered puts by 18 to 1, a reflection of the session's bullish sentiment.
Russell has no positions in YOKU.