E*Trade bulls looking for leg higher

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E*Trade has been working higher, and traders are betting that gains will accelerate in the near term.

More than 5,000 Weekly 22.50 calls expiring at the end of this week were purchased on Friday, according to optionMONSTER's Heat Seeker tracking program. Volume dwarfed previous open interest of 263 contracts, which indicates new money was put to work.

Such long calls lock in the price where investors can buy a stock, letting them position for a move higher at limited cost. They can generate significant leverage if shares move in the right direction but will quickly lose value if shares stall or pull back. (See our Education section)

ETFC rose 1.08 percent to $22.40 on Friday. Shares of the online broker age have been consolidating since early this year, but they recently found support at their 200-day moving average. That could make chart watchers expect the stock's longer-term uptrend to resume. Earnings have mostly been strong.

Total option volume in the name was quadruple its daily average in the session, with calls outnumbering puts by more than 20 to 1.

Disclosure: E*Trade is a competitor of optionMONSTER's sister company  tradeMONSTER .



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: ETFC

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