• 
• See all for optionMONSTER
• View Print Version

• Why traders are buying puts in Melco
• Strategy plays calendar in Capital One
• Heckmann draws bulls before earnings

• AAP 100% Rate It

Bulls see no going back for Advance Auto

Advance Auto Parts has been rallying, and the bulls apparently think that there's no going back.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 2,200 June 90 calls against open interest of just 807 contracts. Most of the large blocks priced for $4.98 to $5.10.

Those calls lock in the price investors must pay to buy shares in the auto-parts retailer. They are relatively expensive because the stock has been rallying and amid a wave of strong growth in the industry. Its results have beaten estimates for the last three quarters.

Implied volatility has climbed to 28 percent, more than twice the stock's historical volatility level. It may increase further in coming weeks as investors look for another strong earnings report on May 15. That could help the call buyer even if the stock doesn't rally. (See our Education section)

AAP rose 2 percent to $91.43 yesterday, pulling back from an all-time high of $92.60 early in the session. The stock is up more than 40 percent in the last six months and has been trending higher since 2003 as car owners spend money to extend the lives of their vehicles.

Overall option volume in AAP was 17 times greater than average in the session, with calls outnumbering puts by more than 3 to 1.

Related Options Articles

• 
  Stocks parked in neutral before Fed
  6/19/2013 08:12 AM
• 
  Upside position adjusted in Nektar
  6/19/2013 05:29 AM
• 
  Time is key to Canadian Natural trade
  6/19/2013 04:29 AM