OptionsHouse

Options Trading News

June 11, 2013  Tue 4:45 AM CT

WU: SEE CHART GET CHAIN FIND STRATEGIES
A trader is betting on a big rally in Western Union by early next year.

optionMONSTER's Heat Seeker system detected the purchase of 2,500 January 20 calls in a single print for $0.30. This is clearly a new position, as the volume was well above the strike's open interest of 1,622 before the trade appeared.

This bullish call buying, which locks in the purchase price of the stock, is looking for WU to rise above $20.30 by mid-January. The options could be sold earlier at a profit if their premiums rise with a rally before then, but they will expire worthless if the shares remain below the $20 strike price. (See our Education section)

WU rose 0.84 percent yesterday to close at $16.79. The money-transfer company spiked higher on May 1 after quarterly earnings beat estimates but has been range-bound for the last month.

Raymond James upgraded the name to "outperform" with a $19 target price yesterday, while Macquarie gave it a "neutral" rating with a $17 target accompanied by bullish commentary. Western Union is scheduled to present at the William Blair & Company's Growth Stock Conference on Thursday.

Total option volume in WU was 4,380 contracts yesterday, double its daily average for the last month. Calls outnumbered puts by a bullish 13-to-1 ratio.
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »