Options Trading News

December 20, 2012  Thu 10:17 AM CT

Lloyds Banking Group has been going straight up, and the bulls are looking for more.

optionMONSTER's Heat Seeker monitoring system detected a surge of volume in the July 2 calls, with some 3,000 contracts purchased for $1.35. Volume is 14 times open interest at the strike, indicating that new positions were initiated.

LYG is up 0.16 percent to $3.23 in morning trading. The London-based bank lost more than 90 percent of its value in the 2008 market crash and has been trading in a range ever since. The stock has been starting to recover this year and more than doubled since Jan. 1, though it is still trading for less than book value.

The long calls bought today lock in a $2 purchase price for the stock. Because they're in the money, they have a delta of 0.97, meaning they will track movements in the share price almost dollar for dollar. (See our Education section for further explanation of how options can be used to generate leverage and manage positions.)

Almost 4,000 contracts have traded in the name so far today, about 43 times greater than average. Calls outnumber puts by 6 to 1.
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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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