Market News

November 22, 2016  Tue 5:47 AM CT

A large position is counting on HD Supply to rally in the next month.

OptionMonster's monitoring program shows that 3,000 December 42.50 calls were purchased in one print for $0.40 yesterday. This is clearly a new position, as open interest in the strike was a mere 7 contracts before the trade occurred.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

HDS rose 1.41 percent to $38.89 yesterday and is up 21 percent in the last month. The industrial distributor is scheduled to announce quarterly results in pre-market hours on Dec. 6.

Overall option volume in the name was twice its daily average yesterday. Calls outnumbered puts by a bullish 36-to-1 ratio.

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