Call buyers clean up fast in DuPont

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The bulls piled into DuPont early yesterday, and they cleaned up in a hurry.

Just minutes after the opening bell, optionMONSTER's Heat Seeker tracking system detected heavy buying in the September 67.50 calls for $0.49 to $0.55. We posted our initial alert with about 13,000 trading, but volume in the strike would end the session at 37,400 contracts--more than 15 times the previous open interest, so these are clearly new positions. (optionMONSTER co-founder Pete Najarian highlighted the unusual activity on CNBC's " Halftime Report " yesterday.)

These long calls lock in the price where investors can buy the chemical stock, allowing them to position for gains at limited cost. The contracts can also generate significant leverage if a rally unfolds, which is exactly what happened yesterday as those September 67.50 calls doubled to $0.98 by early afternoon.

DD rose 1.35 percent to close at $66.20 after trading as high as $66.95 in the session. The stock fell sharply in late June after management cut earnings guidance, then spent a month holding above its 200-day moving average before trying to rebound yesterday.

More than 70,000 options changed hands in the name overall yesterday, compared to 6,600 in a typical session. Calls accounted for a bullish 90 percent of the total.

Disclosure: Najarian owns calls in DD.

(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: DD

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