Options Trading News

May 9, 2013  Thu 4:45 AM CT

Expeditors International of Washington started the month with a bang, and the bulls are think it still has room to run.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 5,000 August 40 calls in the transportation-logistics company, most of which priced for $1.25 to $1.45. Volume was more than twice the previous open interest at the strike, indicating that new money was put to work.

Long calls lock in the price where shares can be purchased, so they can generate significant leverage in a rally. For instance, a move of just 10 percent in the share price would translate into profit of more than 100 percent in the option premiums. (See our Education section)

EXPD rose 0.9 percent to $39.08 yesterday and is up almost 10 percent since the end of April. Most of that move followed the release of quarterly results on May 1. While the numbers essentially matched expectations, management sounded an optimistic tone as freight volumes increased.

Total option volume was twice the daily average yesterday, according to the Heat Seeker. Calls outnumber puts by a bullish 20-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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