Options Trading News

February 27, 2013  Wed 9:32 AM CT

U..S Airways has pulled back to key support, and the bulls apparently think that it's ready to fly.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 20,000 March 14 calls for $0.25 and the sale of an equal number of March 15 calls for $0.06. That results in a net cost of $0.19.

The resulting position is highly leveraged to upside in the Arizona-based airline, generating profit of 300 percent if the shares climb just 11 percent in the next three weeks. (See our Education section for more on the strategy, known as a bullish call spread.)

LCC is up 1.36 percent to $13.44 in morning trading. The stock came into the session down 11 percent in the last month and has returned to the same $13 level that was resistance in late 2012, near its 100-day moving average.

Today's bullish trade comes amid strength elsewhere in the transport sector. The Heat Seeker also showed unusual activity in C.H. Robinson Worldwide and Expeditors International of Washington.

Total option volume in LCC is slightly above average so far in the session. Calls outnumber puts by 58 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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