Markets

Traders charge into CME at highs

A large investor apparently believes that CME will continue its run back to long-term highs.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 3,000 April 101 calls for $1.40 and the sale of an equal number of March 98 calls for $2.10. Volume was below open interest in the 98s, which indicates an existing position was rolled forward in time.

Long calls lock in the price where investors can buy a stock, allowing them to cheaply position for a rally. Capital can also be moved from one contract to another as time progresses, keeping them exposed to further gains with limited risk. (See our Education section)

That's what traders have already been doing for while because they swapped out of the March 95s earlier this month , recovering $1.35 of their money at the time. Yesterday's transaction handed them an additional $0.70 and will keep them long the name for another month.

CME ended the session up 3.34 percent to $100.06, its best closing price since April 2008. The operator of financial exchanges has been gaining momentum since the summer as results improve, coming back to life after years of underperformance. Its bullish uptrend was also cited several times on our proprietary Market Action webinar.

Total option volume in CME was quadruple the daily average, with calls outnumbering puts by almost 5 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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