Markets

Bulls like Discover, other financials

Discover Financial has been dead money all year, but now the bulls are active as earnings approach.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,400 Weekly 60 calls expiring on July 31, most of which priced for $0.70. Volume was more than 155 times open interest, which indicates that new money was put to work.

Long calls lock in the level were a stock can be bought, letting investors profit from a rally while risking only a limited amount of capital. In today's trade, they're hoping for a good set of numbers after the closing bell on July 22. (See our Education section)

DFS rose 1.12 percent to $59.46 in afternoon trading. The credit-card issuer plunged from $66 to $56 between late December and late January because of weak profit and revenue. Shares have drifted aimlessly since.

Other financials have been coming to life. Just yesterday, Bank of America 's Weekly 18s expiring next Friday, July 24, were bought for $0.08. They doubled for our premium subscribers this morning. Region's Financial, an Alabama-based lender with earnings due one day before DFS, lit up Heat Seeker today with buying in its August 10s for $0.58. BAC is up 1.67 percent to $17.98 and RF rose 0.48 percent to $10.36.

U.S. Bancorp already reported earnings, and traders are rolling short calls. They bought back 2,600 July 44 calls for $2.12 and sold a similar number of September 45 calls for $1.82. In this case, they probably own shares and used the options as part of a covered-call strategy. Adjusting the position cost about $0.30 but raises their selling price by $1. USB rose 1.01 percent to $45.99.

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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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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