Markets

How traders are playing Fluor upside

Fluor has been consolidating after a big move last year, and the bulls are betting that it's ready to run again.

optionMONSTER's Heat Seeker tracking system detected the purchase of about 2,600 July 72.50 calls for an average price of about $1.075 and the sale of an equal number of July 62.50 puts for $1.15. Volume was more than 8 times open interest in both strikes.

The trade resulted in a credit of about $0.075 and will simulate owning shares in the Texas-based engineering company. The position will make money if FLR rallies, especially above $72.50, but will lose money to the downside. However, its link to the stock will weaken as time passes, and the position will expire worthless if the shares are between the two strike prices at expiration on July 15.

FLR is up 1.46 percent to $68.33. It rallied from $50 to $70 between November and February, then stalled and moved sideways. The stock has bounced several times at the same $65 level that was resistance in the midst of the financial crisis in mid-September 2008, a potentially bullish pattern that suggests support is now established at that higher price area.

The company has been riding a wave of strong demand, especially from mine operators. Its last earnings report on May 5 beat expectations and its backlog of work rose to a record amount.

The bullish trade pushed overall option volume in FLR to 4 times greater than average so far today, according to the Heat Seeker.

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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