Ingram Micro is consolidating at long-term highs, and traders
think a breakout is coming.
optionMONSTER's Heat Seeker monitoring system detected the purchase
of about 1,200 April 20 calls for $0.20 and $0.25. Volume was
almost 20 times open interest at the strike, indicating that new
money was put to work on the long side.
Those calls lock in the price where investors can buy shares in the
distributor of technology products. They can generate significant
leverage if it pushes higher over the next three weeks. If IM
climbs just 5 percent, for example, the calls will more
than double in value. The benefit of the strategy is that it limits
the amount of capital at risk in the event the stock falls. See our
IM rose 0.05 percent to $19.68 on Thursday and is up 29 percent in
the last six months. The $19 level was resistance for most of the
last five years, but it gapped above it following a strong earnings
report in February and has been consolidating since. That could
make some traders think it's ready to run higher.
Investors may also like the stock because it trades for less than
book value and trades for less than 10 times earnings.
Total option volume was 50 times greater than average in the
session, according to Heat Seeker. Calls accounted for more than 90
percent of the total.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.
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