Bulls set sail with Ship Finance

By David Russell,

Shutterstock photo

The bulls are setting sail with Ship Finance.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,800 March 17.50 calls against previous open interest of just 92 contracts on Friday. Premiums rose from $0.35 to $0.60 as the trades crossed, which shows the strong buying pattern.

Those investors now have right to get buy SFL for $17.50 through expiration five weeks from now no matter how high it might trade during that time. Given their cheap cost, these long calls can generate significant leverage from even a modest gain in the share price. (See our Education section)

SFL rose 2.77 percent to $17.46 on Friday. The operator of ocean-transport vessels has spent more than a year trapped between $14 and $18, but chart watchers might think that it's ready to rally now that the shares have found support above their 200-day moving average.

Total option volume in the name was 22 times greater than average in the session, according to the Heat Seeker, with overall calls outnumbering puts by 197 to 1.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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

This article appears in: Investing Options
Referenced Stocks: SFL

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