Bulls step on gas with Navistar


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Truck maker Navistar is bouncing after a pullback, and one bull is taking the wheel.

NAV optionMONSTER's Heat Seeker tracking system detected the purchase of 4,000 February 55 calls for $4.80 and $4.90 against open interest of just 31 contracts. Total option volume in the name is 10 times greater than average.

NAV is up 3.75 percent to $58.61 in afternoon trading. It rallied about 50 percent between September and mid-December but then stalled around $60--about the same level where it traded immediately before the October 2008 market crash. Many stocks encountered resistance around comparable levels on their charts before continuing higher.

Today's call buying in NAV comes after the shares bounced at their 30-day moving average (dark blue line on chart) and the level where they peaked between May and July. Some chart watchers may consider that evidence the shares remain in an uptrend.

The company's recent results have been mixed, with profitability hurt by procurement issues while the macro backdrop for the industry remains strong. Last month, for instance, management forecast the market for its vehicles will grow by about 25 percent this year.

Another investor today made a smaller trade that reflects more of a neutral stance, selling about 1,600 contracts each in NAV's February 55 puts and February 60 calls for $1.55 and $2.20 respectively. The trade, known as a short strangle, generated a credit of $3.75. See our Education Section for more.

(Chart courtesy of tradeMONSTER)

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

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