For second time in less than a week, traders are looking for
upside in iStar Financial.
optionMONSTER's Heat Seeker monitoring system detected heavy call
buying in the commercial-mortgage company yesterday. The bulls
initially targeted the November 13s for $0.35, followed two hours
later by the December 14s for $0.30. More than 1,100 contracts
traded in each, well above previous open interest and therefore new
lock in the price where shares can be purchased, letting investors
cheaply position for a move higher. They also stand to earn
significant leverage from a rally but will expire worthless if
shares remain below $13. (See our
SFI rose 1.34 percent to $12.84 and appears to have found support
above its May peaks. The stock is now at its highest level in more
than five years, with the potential to retrace its cataclysmic
selloff during the 2008 financial crisis. That appears to be what
the call buyers anticipate.
The company, which stood above $40 seven years ago, trades for less
than book value. Given that banks have reported better loan quality
this earnings season, some investors may think that SFI's business
is also improving.
, our scanners detected a roll from the January 12 calls to the
April 13s as a trader gave the shares more room to run.
Total option volume in SFI was 17 times greater than average
yesterday, according to the Heat Seeker. The December 11 puts were
also bought for $0.10 as investors hedged their bets before the
next earnings report this coming Tuesday.
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