Markets

BMC draws long-term bet at resistance

BMC Software is pushing back to resistance levels from more than a decade ago, and the bulls continue looking for a breakout.

optionMONSTER's Heat Seeker tracking system detected the purchase of 10,000 January 65 calls for $1.05 against open interest of just 206 contracts. The trade pushed total options volume in the software vendor to eight times the daily average.

BMC rose 1.3 percent to $50.06 yesterday and is up 29 percent in the last six months. Investors have been putting money into the stock recently, betting that large enterprises will increase information-technology spending as the economy improves.

The stock has been a frequent target of call buying in that period. It has now returned to the same $51 area where it traded in early 2000 following a big drop and has been making higher lows as it remains above its 50-day moving average (black line on chart at right).

Revenue beat forecasts the last time it reported earnings on Feb. 2, suggesting that the optimistic expectations of increased spending are proving to be correct. Judging by the price chart and yesterday's option action, investors expect the stock to continue higher over the course of 2012.

BMC calls outnumbered puts by more than 350 to 1 in the session.

(Chart courtesy of tradeMONSTER)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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