Options Trading News

July 18, 2014  Fri 12:21 PM CT

Traders are betting that Joy Global will keep rising in coming weeks.

More than 6,300 August 70 calls traded today for $0.41 to $0.71 today, according to optionMONSTER's Heat Seeker tracking system. The volume was well above the strike's previous open interest of 1,471 contracts, indicating that this is fresh buying.

These long calls lock in the price where the stock can be purchased in the next month no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $70 through mid-August. (See our Education section)

JOY is up 0.19 percent to $63.92 in afternoon trading. The mining-equipment manufacturer spiked higher on Wednesday on takeover speculation but pulled back with the rest of the market in yesterday's selloff. Even before that move, the stock had risen more than 25 percent along with other industrial names as U.S. and China reported improving economic data.

Total option volume in the name is more than double its full-session average. Overall calls are outpacing puts by 6 to 1, a reflection of the day's bullish sentiment.
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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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