Option traders are coming back to Covanta after hitting a home
run in the waste-management stock earlier this year.
optionMONSTER's Heat Seeker program detected the purchase of almost
22,000 March 22.50 calls for $0.75. Volume was more than 450 times
open interest at the strike, indicating that new positions were
lock in the price where shares can be purchased, letting investors
cheaply position for a rally. They also have the potential to
generate significant leverage from even a small move in the stock.
That's exactly what happened after our scanners detected bullish
option activity on
: With CVA at $20.22, the July 22.50 calls were bought for $0.10.
The stock traded up to $21.29 the next day, a gain of just 5
percent, and those contracts more than tripled to $0.35. (See our
CVA was green when the calls hit yesterday, but it ended the
session down 0.74 percent to $21.35. Its
last earnings report
on July 17 beat expectations on the top and bottom lines, and the
shares are near their highest level since the broader market
crashed in early 2009.
Total option volume in the name was 160 times greater than average
in the session, with calls accounting for a bullish 97 percent.
(A version of this post appeared on
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