Option Traders Find their ‘Match’ in the Age of the Novel Coronavirus

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  • Bloomberg posted their definitive guide on dating in the age of COVID-19. You can imagine that the traditional weapons of dating and interacting has changed, at least temporarily as traditionally places where people gather are closing indefinitely. As a result, many are turning to online dating sites. While boasting about having a “robust Purell supply,” will likely not attract the opposite sex, users may be more inclined to utilize premium services offered by these companies.

    Match Group Inc (MTCH) is a Dallas, TX company that operates a portfolio of brands, including Tinder, Match, Plenty of Fish, Meetic, Ok Cupid, Our Time, Pairs, and Hinge and other brands. Their dating app for Plenty of Fish began rolling out on March 19, the ability of for users to use their livestream dating feature for free.

    While it can be difficult to find a match to fit your personal life, luckily, it’s nearly as difficult to find a match for your trading dollars. On Wednesday, option traders saw such an opportunity with MTCH options. There was a 6000 contract long call vertical spread that was filled. This is a strategy where a call option at a lower strike price is purchased for a higher price and a higher strike price is sold for a lower price. This creates a net debit, where the cost of the long call is reduced by the call sale.

    In this case the 17APR 20 70/80 long call vertical was traded for around a $3 debit. That gives a break even of $73 and a max gain of $7 if the stock closes above $80 by expiration.

    Action to Take: A similar trade could be setup that provides a high probability of a max gain for a lower ROR. The 17 APR 20 65/67.50 long call vertical can be bought for a $1.25 or less. This provides a max gain of $125 per contract, or 100% ROR, If the stock closes above $67.50 at expiration.

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