OptionsHouse

Options Trading News

December 23, 2013  Mon 12:21 PM CT

YRCW: SEE CHART GET CHAIN FIND STRATEGIES
Buyers have been jumping on YRC Worldwide this month, and they have cleaned up so far.

optionMONSTER's Heat Seeker monitoring program detected buying in the April 12.50 calls earlier this month for about $2.50. The trucker was under $11 at the time and preparing to face a union vote that would let it escape from under a daunting mountain of pension liabilities.

The stock exploded higher today after creditors agreed to cut $300 million of debt in return for receiving shares, and those April calls have more than tripled to almost $8. YRCW is surging another 25.32 percent this afternoon to $18.76.

The option activity continues today as well. This time, Heat Seeker shows the purchase of almost 3,700 January 20 calls for $1.80 to $2 against open interest of 1,647 contracts. These long calls allow traders to position for a rally with limited risk at prices much lower than the share price, potentially providing significant leverage. (See our Education section)

YRCW was also cited on our proprietary Market Action webinar last week as a turnaround play in an industry that's already benefited from the strong economy. (Others such as Con-Way and Arkansas Best rallied after bullish activity in October.)

The company's 26,000 Teamsters will now vote by Jan. 8 on whether to extend their contract through 2019 while lowering salaries. The move is part of its broader restructuring.

Overall option volume is more than quadruple the daily average in YRCW so far today, according to the Heat Seeker. Calls account for a bullish three-quarters of the total.
Share this article with your friends


Related Stories

YRCW

Bulls hitching a ride on YRC Worldwide

July 11, 2016

A large trade is looking for a strong rally by early next year in the transportation-services company, which is expected to report earnings on July 28.

OptionsHouse

Premium Services

Education & Strategy

Know thyself before trading

All too often people jump into market without considering some basic guidelines that have as much to do about themselves...

View more education articles »