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.

News Archives
OptionsHouse

Education & Strategy

Election Sector Rotation

Sector rotation is the process where mutual funds, portfolio managers, and investors in general, shift their investments from one sector of the economy to another.

More education articles »