Traders apparently think that Charles Schwab is ready to dash
optionMONSTER's Heat Seeker monitoring program detected heavy call
buying in the discount brokerage on Friday as investors snapped up
the May 18 and June 18 calls.
The May contracts started trading in large size for $0.15, then
tripled to $0.45 as the stock advanced. More than 12,200 changed
hands in volume well above the strike's open interest of 3,590
contracts before the session began, indicating new activity.
Those buyers were looking for a quick rally by expiration at the
end of this week. The
could generate massive leverage from even a small gain in shares,
yielding profit of more than 500 percent on a mere 5 percent stock
move to $19. (See our
The June 18s, which expire five weeks later, fetched $0.40 and
doubled to $0.80 by the end of the session. Volume of 5,600
contracts in that trade surpassed the previous open interest of
SCHW rose 3.31 percent to $18.09 on Friday. It rallied some 30
percent between December and February, paused, and then
consolidated. The shares bounced sharply after testing support at
their 100-day moving average early this month and have been ripping
Overall option volume was 14 times greater than average in the
session. Calls accounted for more than 80 percent of the total.
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