Alcatel Lucent SA
) was soaring this morning, up almost 7% to trade at $2.00 after
revealing a comprehensive
restructuring and cost-cutting plan
. During the surge, the telecom firm also touched a 52-week high, a
cent higher than its current perch. All this activity prompted BMO
to raise its price target on ALU to $3 from $2, following in the
The news had an effect in Alcatel Lucent's options pits, as well.
As of the time of this writing, roughly 32,000 calls have traded so
far, which is 26 times the expected intraday volume. According to
, the biggest mover by far is the July 2 call, thanks to a block of
25,000 contracts that an investor bought to open for $0.10 per
contract. The trader will profit from the at-the-money call in the
event that ALU shares advance to $2.10 (strike price plus net
debit) by July 19, when back-month options expire.
last week's group of long-term bulls
, the bullish speculator is likely banking on Alcatel's recent
technical strength to continue carrying it to new annual heights.
The shares have rallied nearly 52% since tagging a recent intraday
low of $1.31 on May 6, and they continue to be propelled upward by
their 10-day moving average. Additionally, over roughly the same
time span (i.e., two months), ALU has outperformed the broader
(INDEXSP:.INX) by an impressive 35 percentage points.
Not everyone is on board Alcatel's bullish bandwagon, however. In
spite of the recent upgrades we mentioned earlier, five out of
eight analysts covering the stock still rate it "hold" or worse.
Whether the bulls or the bears are right, however, this morning's
big trader can lose no more than the premium paid to initiate his
long call position -- to be precise, that's $250,000 (25,000
contracts * 100 shares per contract * 0.10 cost per contract).
This article by Alex Eppstein was originally published on
Schaeffer's Investment Research
Below, find some more great content from Schaeffer's Investment
Why It Pays To Bet Against Pension Funds
Bulls Emerge on Newest OmniVision Technologies,
SanDisk Corporation (
) Option Players See Limited Upside