Focus Media has pulled back to a key support level, and the
bulls are looking for the next leg higher.
optionMONSTER's Heat Seeker tracking system detected the purchase
of almost 3,700 July 30 calls against open interest of 1,594
contracts. Most of the contracts priced for $0.55 late in the
session as the Chinese media company rallied, with a single block
accounting for the bulk of the volume.
FMCN rose 4.91 percent to $27.99 yesterday. The company has
benefited from strong demand for its network of digital advertising
screens and raised guidance the last two times it reported
earnings, on March 8 and May 24.
The shares enjoyed a big rally in the first four months of the
year, climbing from about $22 to over $37. But the bears took
charge in May and June amid a broad selloff in Chinese equities.
FMCN has now returned to the same price area where it peaked in
late 2010 and the location of its 200-day moving average (purple
line on chart at right). That could make lead traders to believe
that it's now back to support and ready to rally again.
The Heat Seeker also detected the purchase of about 1,800 July 27
calls earlier in yesterday's session, mostly for $1.10 to $1.20,
though that activity was below open interest in the strike.
Overall option volume in FMCN was almost twice the average amount.
(Chart courtesy of tradeMONSTER)
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