Institutional Investor Places Large Bull Call Spread on XP Ahead of Earnings
XP Inc. (ticker: XP), a Brazilian financial services platform, experienced significant options activity with volume reaching nearly 251,000 contracts—over 13 times its 30-day average. The unusual trading centered around bull call spreads for November expiration at $24 and $25 strike prices. This strategy suggests an institutional investor is making a high-risk, high-reward bet that XP's stock will rise sharply ahead of earnings on Nov. 16. The options trade involved buying the long $24 calls at $1.15 while selling short $25 calls for $0.50 in premium, resulting in a net debit and capping potential profit at $0.35 per contract. The maximum gain is limited to $1.8 million if XP's stock reaches or exceeds the $25 strike price by expiration on Nov. 20. Despite low probability of success—only one-in-five chance—the trade appears motivated by a belief in strong earnings performance and subsequent upward movement, with risk mitigation achieved through shorting higher-strike calls.
Topics: bull_call_spread institutional_activity options trading_volume