Bulls put stamp on Pitney Bowes

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 Pitney Bowes has broken a long-term resistance, and option traders are betting that it will keep ripping higher.

optionMONSTER's Heat Seeker tracking program detected the purchase of 5,000 January 30 calls for $1.80 and the sale of 5,000 January 25 calls for $3.80. Volume was below open interest at the lower strike, which suggests that a long position was closed and rolled to the higher strike.

Long calls lock in the price where a stock can be bought, letting investors cheaply position for gains while limiting the amount of capital at risk. They can also generate significant leverage if a rally ensues. Rolling to the January 30s allows the trader to receive a credit of $2 while keeping him or her exposed to further gains. (See our Education section)

PBI fell 0.22 percent to $26.98 on Friday and is pushing above its previous highs from 2010 and 2011. Traditionally a maker of snail-mail postage meters, the company has been reinventing itself as a provider of communications products and services. The stock has more than doubled since bottoming near $10 early last year.

Overall option volume was 8 times greater than average in the session, with calls accounting for a bullish three-quarters of the total.

(A version of this post appeared on InsideOptions Pro on Friday.)



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.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: PBI

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