Credit: Shutterstock photo(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)
Traders are looking for CA to rally by early next year.
optionMONSTER's Heat Seeker monitoring program found heavy buying in the January 28 calls, with nearly 7,000 trading for $0.94 to $1.25 yesterday. Volume well surpassed the strike's open interest of 1,462 contracts, showing that new positions were initiated.
These long calls lock in the price where the stock can be purchased through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will lose value if shares stall or pull back. (See our Coaching section)
CA rose 0.86 percent to $28.28 yesterday and is up 3 percent in the last three months. The software company rallied in mid-November after increasing dividends and buybacks, but shares have drifted sideways with their 100-day moving average since. Its next quarterly results are estimated to come out on Jan. 20.
Overall option volume in CA was 26 times greater than average yesterday, according to the Heat Seeker. Total calls outnumbered puts by a bullish 27-to-1 ratio.
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.
