Joy Global is up nearly 6 percent today, but that's nothing
compared with the profits of some option traders.
Just yesterday, our Heat Seeker monitoring system detected a surge
of activity in the short-term weekly options. Investors snapped up
the Weekly 65 calls expiring this Friday for $0.44 to $0.75,
placing cheap bets on a quick rally.
And that's exactly what they got this morning. JOY was trading
higher in the pre-market, opened up 2.6 percent and then proceeded
to triple that gain before retreating. Shares of the
mining-equipment maker are now up 5.65 percent to $67.13 in
The Weekly 65 calls, on the other hand, opened at $0.86 and quickly
shot up to $3.30--a gain of 400 percent to 500 percent. That's a
pretty impressive rise from a single-digit move in the share price.
It's another example of the opportunities afford by weekly options,
short-term contracts tailor-made for stocks like JOY. Because these
contracts are so cheap, investors can place bullish or bearish bets
at a tiny fraction of the share price, which helps manage risk.
(See our dedicated
weekly option page
Total option volume in JOY is 10 times greater than average so far
today, according to the Heat Seeker.
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.