Dow Chemical has been running hard, and traders are betting that
the rally will continue all year.
optionMONSTER's Heat Seeker tracking system detected the purchase
of more than 40,000 January 50 calls for $2.78. Two giant blocks of
20,000 contracts each accounted for almost all the volume, dwarfing
previous open interest of 17,037.
lock in the price where the chemical producer's shares can be
bought, letting investors cheaply position for a rally. They now
are risking about 5 percent of the stock's underlying value, which
limited the amount of money they can lose in the event of a
selloff. At the same time, they stand to benefit from potentially
huge leverage if the shares keep climbing through early 2015. (See
DOW rose 1.29 percent to close at $47.83 yesterday, at one point
touching an 8-1/2 year high above $48. The stock has been climbing
amid pressure from activist investor Dan Loeb and following a
strong earnings report last month. It was also recommended as a
long on optionMONSTER's exclusive
webinar in December.
Total option volume in the name was 6 times greater than average in
the session, with overall calls outnumbering puts by a bullish
(A version of this post appeared on
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