Traders have discovered Alaska Air in recent weeks, and it's
paid off in spades.
The airline rallied steadily higher for years amid little option
activity. It pulled back sharply in May and June after touching an
all-time high of $68, only to find support above its 200-day moving
average less than three weeks ago. That's when the paper hit.
optionMONSTER's Heat Seeker monitoring program showed initial buys
in the August 55 calls for $1.25 to $1.30 back on
. Shares started rallying this week, and those contracts are now
worth more than $7. On
there was also buying in the July 55 calls for $1.95 to $2.65 and
the July 60s for $0.45 to $0.60. Both of those have more than
doubled today as ALK continues to push higher.
Now traders are rolling some of the winning positions forward in
time, looking for the stock to resume its monster uptrend. Today
the Heat Seeker shows more trades in the July 55 calls and the
August 55 calls, this time for $6 and $6.80 respectively. Large
blocks were bought at the same time in the October 65s for $2.80
and the October 70s for $1.47.
Swapping the nearer-dated options for longer ones gives the
more time to enjoy a rally
in the name. It also provides protection against a near-term
decline because the
has been reduced. (See our
section for more on how to put time on your side using
ALK is up 4.13 percent to $62.02 in afternoon trading. Earnings
come out on July 25.
Total option volume is 10 times greater than average in the name so
far today. The Heat Seeker shows calls outnumbering puts by a
bullish 23-to-1 ratio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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