OptionsHouse

Options Trading News

December 31, 2013  Tue 5:16 AM CT

MAT: SEE CHART GET CHAIN FIND STRATEGIES
Mattel has been running, and the bulls came back to the toy maker yesterday.

optionMONSTER's Heat Seeker program detected heavy buying in the February 48 calls early for $1.10 to $1.25. Volume mounted at the strike and surpassed 6,400 by the end of the session, dwarfing previous open interest of just 75 contracts.

These long calls lock in the price where a stock can be bought, letting investors cheaply position for a breakout with the shares near their all-time highs from May. The contracts can also generate significant leverage because of their low entry cost but will expire worthless if shares remain below $48 through mid-February. (See our Education section)

MAT rose 1.77 percent to $47.82 yesterday and is up 16 percent since bouncing at key support around $40 in early October. The last earnings report also beat expectations thanks to strong sales of Barbie and Monster High dolls.

While the company hasn't yet announced the date of its next quarterly report, last year's calendar suggests it will occur by early February. So those February 48s could benefit from another strong release.

Overall option volume was 16 times greater than average in the session, with calls accounting for a bullish 90 percent of the total.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


Related Stories

MAT

Put volume hits Mattel before earnings

January 28, 2016

The toy maker is scheduled to announce quarterly results after the market closes on Monday, and traders are positioning for a possible drop.

OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »