Can anything stop Manitowoc?

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Manitowoc started rallying in December, and traders think it's just getting started.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 20,000 June 33 calls for $1.25 and the sale of 15,000 June 30 calls for $2.35. Volume was below previous open interest in the 30s, which suggests that an existing position was closed and rolled to the higher strike.

The trader probably got long when the maker of cranes and food-service equipment was at a much lower price. Now that it's run higher, he or she is recovering $1 million of the original capital spent and remains exposed to further gains through the new long calls . (See our Education section for more on how to manage positions at low cost with options.)

MTW is up 3.51 percent to $30.09 in afternoon trading and has risen 57 percent in the last three months. The last three earnings reports have beaten estimates as new products and cost controls boost margins and offset weak revenues.

The shares are now back to levels last seen in mid-2008 when the broader market was collapsing. They quickly crumbled from $40 to $30 at that time, which could make some chart watchers now expect a rapid retracing of that drop.

Total option volume in the name is already more than 11 times its full-session average for the last month, according to the Heat Seeker, with calls outnumbering puts by 110 to 1.



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: MTW

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