Bulls make another call to Vodafone
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of about 15,000 July 27 calls for $1.05 and the sale of an equal number of July 24 puts for $0.58. Volume was more than triple open interest at each strike, indicating that new positions were initiated.
The trade follows repeated upside activity since the start of the year, the most recent of which produced gains of about 60 percent in a matter of days.
Today's strategy cost $0.47 and is similar to owning shares in the global telecom giant. The long calls will appreciate and the short puts will lose value if VOD climbs, while the opposite will happen to the downside. The benefit of using the options is that it requires much less capital than owning shares, while programming a buy order for $24 if it drops to that level. (See our Education section)
VOD is up 2.55 percent to $26.77 in afternoon trading. Shares double-bottomed near $25 late last year and then pushed higher on speculation that the company would sell its 45 percent stake in Verizon Wireless.
The company is scheduled to report quarterly results on Feb. 7.
Total option volume is almost 5 times greater than average so far today, according to the Heat Seeker.