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CommonWealth bulls like activism
Bulls join barbarians at CommonWealth's gate
CommonWealth REIT has barbarians at its gate, and the bulls love it.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,000 November 25 calls for $0.60. There was no open interest at the strike before the trade appeared, indicating that a new position was initiated.
These long calls lock in the price where shares can be purchased in the owner of offices and industrial spaces. The buyers will now be sure not to miss a rally, while limiting their downside risk if it tanks. (See our Education section for more on how to manage trades more effectively with options.)
CWH finished yesterday unchanged at $22.54. The stock exploded higher in late February after activist investors Corvex and Related said the company was badly run and offered to buy the real-estate investment trust for $27. Other investors have piled in since.
The shares rose more than 4 percent early yesterday on an announcement that the company's management agreement would be altered, but they then surrendered those gains. Corvex and Related called the move "hollow rhetoric" and "mere window dressing." The dispute is currently in arbitration.
Volume also spiked in the October 22.50 calls and the January 22.50 calls later in the session, apparently the work of an investor rolling a long position forward in time.
CWH is roughly at the same level where it consolidated in March and April before bouncing in late July. That could also make some chart watchers believe that shares will continue to advance.
More than 12,000 CWH contracts changed hands in the session, dwarfing its daily average of 529. Calls outnumbered puts by almost 11 to 1.