Markets

Cooper Tire bulls take the wheel

The bulls are looking for Cooper Tire & Rubber to get back on the road following a strong earnings report early this month.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,000 June 28 calls for $1.10 and the sale of an equal number of June 31 calls for $0.15 yesterday. Volume was more than twice the previous open interest in each strike, indicating that new positions were initiated.

Known as a bullish call spread , the trade will cheaply leverage a rally between the two strike prices. It will return $3 if the tire maker closes at $31 or higher on expiration--a profit of more than 200 percent based on its $0.95 cost. (See our Education section for more on the leveraging potential of options.)

CTB rose 1.09 percent to $27.78 yesterday and is up 17 percent in the last month, with much of that move coming after profits beat expectations on May 2. The stock is also back above its 200-day moving average for the first time since a planned takeover by India's Apollo Tyres collapsed in late 2013.

Total option volume in Cooper was 7 times greater than average in the session, with calls outnumbering puts by 34 to 1.

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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