Upgrade draws bulls to Omnicom

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Omnicom popped on an upgrade today, and the bulls are piling in.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 3,600 January 75 calls for $0.90. Volume was more than 30 times open interest at the strike, indicating that new money was put to work.

These long calls lock in the price where shares can be purchased in the advertising company, letting investors position for a rally at minimal cost. This way they can manage risk and generate potentially significant leverage. A 10 percent move in the share price, for instance, will drive up those January 75s by more than 400 percent. (See our Education section)

OMC is up 2.86 percent to $72.57 this afternoon, trading above $73 at one point for the first time ever. The pop came after Goldman Sachs upgraded the shares to "buy" from "neutral" and raised its price target to $88 from $68.

The company already reported strong quarterly results in October, spurring hopes that demand would continue to improve into year-end. It's also in the process of merging with Publicis Groupe.

Overall OMC option volume is 22 times greater than average so far today, according to the Heat Seeker. Calls account for a bullish 95 percent of that total.



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: OMC

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