One investor is going in the money on Pennsylvania utility stock PPL.
optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,299 April 26 calls for $4, and the sale of an equal number of January 26 calls for $3.90. Volume was below open interest in January but not in April, which suggests that an existing long position was rolled from one contract to the other.
PPL declined 0.8 percent to $29.78 yesterday and has been slowly grinding its way higher along with most other utility stocks in the last year. Given the share price and the strike on the options, we see that the calls were in the money --an inexpensive and simple way to leverage a small move.
In yesterday's option trade, both calls had a delta of 1 , meaning they will track movements in the share price dollar for dollar. If PPL stock climbs 10 percent to $32.76, the April calls will appreciate by more than 60 percent.
The main point of the transaction was to give the investor an additional three months in the position, which cost them just $0.10. (See our Education section) for more ideas on to leverage moves in the market and to manage risk.)
Overall option volume in PPL was 10 times greater than average in the session, with calls outnumbering puts by a bullish 39-to-1 ratio, according to the Heat Seeker.
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