Lear call buyer hopes for breakout

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Someone apparently thinks that Lear is poised for a breakout.

The maker of automotive seats has gained more than 60 percent since late July and is now sitting around the same $56 level where it hit resistance in two years ago. Instead of risking a lot of capital buying shares after such a move, one investor is using options to manage the trade.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 2,000 September 60 calls for $2.80. Open interest stood at just 6 contracts when the session began, which means that new money was put to work on the long side.

These long calls give the trader the right to buy LEA for $60 in the next six months, no matter how high shares may go. That will prevent him or her from missing a rally while dramatically reducing the amount of capital at risk. (See our Education section)

LEA is up 0.14 percent to $55.80 in morning trading. Its advance has been supported by strong earnings amid a rebound in North American vehicle demand.

Total option volume in the name is 8 times greater than average so far today, according to the Heat Seeker. Calls outnumber puts by more than 500 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: LEA

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