One big investor likes Reynolds American for the long haul.
optionMONSTER's Heat Seeker monitoring program detected the
purchase of about 3,000 January 2015 50 calls in the cigarette
maker, most of which price for $3.60. Volume surpassed open
interest at each strike, indicating that new positions were
give the trader the right to buy RAI shares for $50 in the next 15
months no matter how high they might climb. The options could also
be sold earlier at a profit if premiums rise with a rally in the
interim, but they could also expire worthless if the stock drops
significantly. (See our
RAI rose 0.64 percent to $50.60 on Friday and has been trending
steadily higher since 2009. It hit resistance around the $50 level
in May, pushed above it in July, and is now trying to break through
once again. The lows were incrementally higher during that time,
which could make some chart watchers think that the bullish uptrend
remains in place.
Total option volume was 10 times greater than average in the
session, according to the Heat Seeker. Calls outnumbered puts by a
bullish 14-to-1 ratio.
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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