Shares of freight logistics platform Full Truck Alliance (YMM) are down nearly 60 percent over the last year. One trader sees a rebound in shares in the next month.
That’s based on the December $10 calls. With 29 days until expiration, 13,846 contracts traded compared to a prior open interest of 561, for a 25-fold rise in volume on the trade. The buyer of the calls paid $0.23 to make the trade.
Shares recently traded around $7.25, so the stock would need to rise about 38 percent for the options to move in-the-money. That would still leave the stock well off its 52-week high of $16.43.
While China has been seeing an economic slowdown, trucking needs remain robust, as all physical goods are shipped by truck at some point before reaching the final consumer.
Action to take: Shares are already up nearly 30 percent in the past few trading days. Such a rally may have a day or two off before resuming. Buyers of shares should look for a down day, and then look to take some quick profits.
For traders, the options are inexpensive, and could deliver high double-digit gains in the coming weeks. With little time on the trade, it may be best to look for mid-double-digit gains and taking a quick profit before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.