Options Trading News

July 10, 2014  Thu 3:47 AM CT

A large trader is buying more time for a rally in B/E Aerospace, which reports earnings in less than two weeks.

optionMONSTER's Heat Seeker system detected the sale of 14,199 July 95 calls for $0.55 and the purchase of 14,199 August 100 calls for $1 yesterday. Volume was below the previous open interest in the near-term contracts but far above it in the later strike, indicating that a long position was rolled forward.

The trader closing the July contracts--which expire at the end of next week--and is opening a new position in August, essentially paying $0.45 to stay in the position for another month. The new long calls are looking for BEAV to rise above $100 by mid-August but will expire worthless if shares remain below that strike price. (See our Education section)

BEAV gained 1.29 percent to $93.38 yesterday, a penny off its session high. In early May the stock gapped up from about $89 to $100 on reports that it was exploring a possible sale, but shares have pulled back since while trading in an increasingly tight range.

The aircraft products and services company is scheduled to report quarterly results on July 23, three sessions after that month's options expire.

Yesterday's total volume in BEAV topped 34,000 contracts, more than 16 times its daily average for the last month. Overall calls outnumbered puts by a bullish 14-to-1 ratio.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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