ADT has been rampaging higher, and the bulls think more gains are in store.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 12,600 May 45 calls for $0.675. Some 20,000 April 43 calls were also sold for $0.175 against previous open interest, so it appears an existing long position was rolled forward in time and higher in price.
Long calls lock in the level where investors can buy a stock, which allows them to profit from a rally at limited cost. They can also swap capital between contracts to get the most bang for their buck. (See our Education section.)
Today's transaction cost $490,000 and extends their bullish position through the next earnings report on April 29.
ADT is off 0.12 percent to $41.76 in afternoon trading but is up 16 percent in the last three months. The home-security company has been riding strong quarterly reports as it fights back from a violent selloff at the beginning of 2014. Traders nearly tripled their money in just two sessions with short-term calls in early March.
Total option volume is 20 times greater than average so far today, with calls outnumbering puts by more than 2,000 to 1.
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