Markets

How the bulls cleaned up in CIT

(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)

The bulls cleaned up quick yesterday in small-business lender CIT Group.

optionMONSTER's tracking programs detected buying early in the November 42 calls for $0.24 to $0.42 and the November 43s for $0.10 to $0.21. Volume zoomed past open interest in both early, an indication new money was put to work.

Long calls lock in the price where investors can buy shares, which allows them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage. The November 42s, for instance, more than doubled to over $1 as the stock rose, while the 43s tripled to $0.60. (See our Coaching section)

CIT ended the session up 4.86 percent to $43.13. It was the stock's biggest one day gain since a play to sell assets on Oct. 22 triggered a 16 percent rally. Some investors may also like that it trades for less than book value.

More than 3,500 contracts each traded in the 42s and 43s. That pushed option volume in CIT to 20 times its daily average for the last month. Overall calls accounted for a bullish 94 percent of the total.

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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


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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