Near-term bullishness in insurance company Genworth (GNW)


Genworth Financial Inc. (NYSE: GNW ) shares will be trading higher than $14 at July options expiration in 10 days, according to at least one investor who chose to load up on out-of-the-money calls to express bullishness during the short term.

Shares of the life insurance company have gained 2%, or 23 cents, to $12.89 during afternoon trading without any notable news on the wires today. GNW is due to announce earnings figures on July 29 after the market closes (analysts estimate earnings of 28 cents a share) and options action on the tape suggests investors expect significant upside even before the next report.

The July 14 calls have been active throughout Tuesday's trading session thanks to investors who appear to be bullish on GNW and willing to commit a hefty amount of capital to bet on upside. These out-of-the-money (OTM) calls changed hands for an average price of 26 cents per contract, which was right at the ask price when the majority of the volume crossed the tape. Current open interest of these OTM calls is just 2,000 contracts, indicating the majority of the volume was initiated to open. Investors who bought these calls will make money if the stock is trading higher than $14.26 at expiration, and will theoretically make unlimited profits if the stock continues to the upside. On the other hand, if GNW shares are still trading lower than the breakeven price, the investor loses the premium paid, or 26 cents per contract. Given that the shares were above $14 fewer than two weeks ago, this call purchase could be a bet that GNW is due for a snap-back rally.

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.

This article appears in: Investing , Options

Referenced Stocks: GNW

Jud Pyle

Jud Pyle

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