Bulls shopping at Vitamin Shoppe

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After months of weakness, the bulls are finally shopping at Vitamin Shoppe again.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 3,600 February 50 calls, most of  which priced for $5.90 to $6.60. Volume surpassed the previous open interest of 2,809 contracts at the strike, indicating that new money was put to work.

These long calls lock in the price where shares can be purchased in the retailer of vitamins and supplements, letting investors cheaply position for a rally. Those contracts have a delta of 0.70, meaning they will appreciate $0.70 for every $1 the stock climbs. Given the low entry price, that gives them the potential for significant leverage. (See our Education section)

VSI rose 1.45 percent to $54.56 yesterday and is up 22 percent in the last month. Much of that move occurred on Nov. 5 after the company reported strong profit and said it would benefit from a big acquisition and new distribution center. Goldman Sachs upgraded the stock to "conviction buy" on Monday.

Total option volume was 13 times greater than average in the session, according to the Heat Seeker. Calls outnumbered puts by almost 6 to 1.



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: VSI

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