Masco attracts short-term bulls

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Masco has gotten hammered along with other housing-related names recently, but short-term option traders are looking for a quick bounce.

optionMONSTER's Heat Seeker monitoring system detected heavy buying in the April 22 calls, where more than 10,700 traded mostly for $0.25 to $0.35 yesterday. Previous open interest in the strike was just 2,633 contracts, indicating that new money was put to work.

Such long calls lock in the price where a stock can be purchased, letting investors cheaply position for gains while limiting the amount of capital at risk. These contracts can also generate significant leverage in a rally but will expire worthless if shares remain below the strike price, which in this case is $22. (See our Education section)

The company, which manufactures products ranging from cabinets to faucets, is scheduled to report earnings a week after those options expire.

MAS was down 0.23 percent yesterday to close at $21.86. The stock had run from a recent low of $20.60 on March 27 to $23.42 last Friday, but it gave up most of those gains as the broader market sold off in recent days.

Overall option volume in Masco was nearly 6 times its daily average, with calls making up a bullish 96 percent of the total.

(A version of this post appeared on InsideOptions Pro yesterday.)



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: MAS

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