How some bulls are playing Ares
Someone apparently thinks that Ares Commercial Real Estate is
ready to rock.
optionMONSTER's Heat Seeker monitoring system detected the purchase of more than 4,000 December 15 calls, most of which priced for $0.15 and $0.20. Volume was more than 70 times open interest at the strike, indicating that new money was put to work.
Long calls lock in the price where the stock can be purchased, letting investors cheaply position for a rally. The contracts can also generate significant leverage if the shares keep climbing. (See our Education section)
ACRE rose 3.45 percent to $13.50 yesterday after reporting better-than-expected quarterly profit. "We now have the capability to be a full spectrum lender of short and long term financing solutions in the strategically important multi-family market segment," co-CEO Todd Schuster said in a release. "We have developed a powerful combination of origination scale and product depth that positions us well to take advantage of a broader set of market opportunities going forward."
The stock traded between $16 and $18 for more than a year after its initial public offering in April 2012, only to crater in June on news of a big secondary offering. It's been working its way back in the last two weeks. ACRE also trades for less than book value, which could make some investors think that it's too cheap.
Total option volume was 157 times greater than average in the name, with not a single put changing hands all session.