has been rampaging higher, and traders think it will keep on going.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of more than 17,000 January 20 calls for $3.30. A similar
number of January 17 calls was sold at the same time for $6.15
against previous open interest, which suggests an existing position
was closed and rolled up to the higher strike.
Calls lock in the price where shares can be purchased in the online
broker, letting investors cheaply position for a rally. They
apparently bought the 17s when SCHW was trading lower and came into
yesterday's session with big gains. By adjusting the position
higher they recovered $2.85 of their capital, while only lowering
to 0.85 from 0.99. That means they remain highly leveraged to
upside in the share price. (See our
SCHW rose 0.39 percent to $23.10, and is up 61 percent so far this
year. It surged following a strong earnings report on Oct. 15, and
has been holding its ground at five-year highs since.
Total option volume was 17 times greater than average in the
session, according to Heat Seeker. Calls outnumbered puts by a
highly bullish 570-to-1 ratio.
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.
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