Paper bought 15,000 VALE July 5 calls for .22.
VALE SA (ADR), trading 4.93 with an IV30 of 68 and an HV10 of 72, is seeing bullish call action today.? Tied up to stock, a trader bought 15,000 of the July 5 calls paying .22.? VALE which has an ADV of 28,800 and an OI of 1.25 million contracts sees lots of call trading, but usually those trades are of longer duration.? While there is OI of over 20,000 that has been built in small block trades, thus this appears to be an opening long call/long vol trade.
The trade likely believes that VALE is going to keep going higher.? He or she is taking some stock off the books and is replacing the stock delta with the leverage from calls.? He or she also believes that the stock is likely to move between now and July expiration.? The trader is leaning slightly longer, but with the stock tie could do well if the trade moves the other way.? Since the purchase the offer price has become the bid.
This trade is bullish the underlying and aggressively bullish volatility.