Bulls want to fly with Spirit AeroSystems

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Spirit AeroSystems doesn't usually trade many options, but activity surged yesterday as the bulls stepped in.

Our tracking systems detected the purchase of about 3,600 April 25 calls against open interest of 1,860 contracts. Most of them priced for $0.45.

Those long calls lock in the entry price investors must pay to buy the stock, so they can provide major leverage to a rally. But they can also expire worthless if the shares fail to move. (See our Education section)

SPR fell 0.5 percent to $23.86 yesterday but is up more than 50 percent in the last six months. The company produces airplane segments for Boeing and Airbus. That overall industry has been pretty strong as the long-term secular growth story remains intact.

Its last financial report on Feb. 9 was mixed, with earnings weaker than expected. But buyers stepped in and drove the stock higher after an initial selloff.

More than 3,700 options traded overall yesterday, in SPR, compared with the average of just 107. Calls outnumbered puts by a huge 468-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)



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: SPR

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