Pullback brings out buyers in ADP

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Automatic Data Processing pulled back yesterday, and the bulls stepped in.

optionMONSTER's Heat Seeker system detected the purchase of about 3,200 April 62.50 calls for $0.35. Volume was more than 23 times the strike's open interest before the session began, indicating that new money was put to work in the trade.

These long calls lock in the price where investors can buy shares, giving them the potential to generate some nice leverage in the event of a rally. But if the stock stays below the $62.50 strike price, they will expire worthless. (See our Education section)

ADP fell 1.54 percent to $60.27 yesterday. The slow-moving payroll stock has been grinding higher for the last 2-1/2 years, recently touching its best level since late 2000.

Total option volume was 5 times greater than average in the company yesterday, with calls accounting for a bullish 80 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.

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This article appears in: Investing , Options

Referenced Stocks: ADP

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