On Friday afternoon, I noticed an institutional type play unfolding in Yahoo call options. Somebody bought huge amounts of JAN 40 calls and shorted JAN 35 calls in approximately a 2.75 ratio. That makes its a ratio backspreads with breakeven between 34-43 on JAN 20 expiration. If there is a momentous move in Yahoos stock that backspreads will earn nearly 5 -6 million on it. If Yahoos stock slowly inched its way up there it could be a $59,000 loss. I have since than duplicated that strategy , it makes sense to play along this calculated strategy for Alibaba IPO on NOV 5, that could be such a catalyst for Yahoo' s stock to move. Yahoo has a 39% stake in the IPO and it will move its stock price if this hyped up IPO goes well. So here how you too can scale into it. BUY 11 YAHOO JAN 40 CALLS SELL 4 YAHOO JAN 35 CALLS Net debit = $252 B/E = 43.22 on expiration. Theta= 9.39 Vega= 29.08 Delta= 39. Remember the breakeven is on expiration, you are not going to hold this too long after November 5, hence your B/e can be low as 38.5 or so with that implied volatility helping your position. There are unlimited profits after a major move. All prices as of Fridays close.