E*Trade Financial ripped higher yesterday, and the bulls were
The retail brokerage spent years under a cloud caused by bad loans
during last decade's mortgage bubble, but it's been rebuilding
itself and crossed a major milestone yesterday when regulators said
the lending subsidiary was healthy enough to pay a dividend
upstream to the parent company.
Management said it will extract $500 million from the
once-imperiled unit and use the money to pay down debt. ETFC
rallied 8.05 percent to $15.71 on the news, closing at its highest
price in more than two years.
optionMONSTER's Heat Seeker tracking system also showed bullish
activity in the September 16 calls, with buyers snapping up 6,500
contracts--more than quadruple previous open interest at the
strike. The largest block fetched $0.22, but some were purchased
for as much as $0.40.
lock in the price where shares can be purchased, letting investors
cheaply position for a move higher. If the shares gain an
additional 10 percent by expiration 2-1/2 weeks from now, those
contracts will more than triple in value, which illustrates the
kind of leverage that can be achieved with options. (See our
More than 18,600 contracts changed hands in the session, almost 15
times the daily average. Calls accounted for a bullish 80 percent
of the total.
(Editor's note: E*Trade is a competitor of optionMONSTER's sister