Options Trading News

October 28, 2013  Mon 4:14 AM CT

Caesarstone is attracting upside option activity ahead of its earnings report next week.

More than 2,900 January 45 calls were bought for $2.15 to $4.20 on Friday afternoon, according to optionMONSTER's Heat Seeker tracking system. These are clearly new positions, as open interest in the strike was just 251 contracts before the trades appeared.

These long calls lock in the price where the stock can be purchased through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $45. (See our Education section)

CSTE surged 7.46 percent to $42.64 on Friday, closing above its 50-day moving average for the first time since Oct. 8. The company, which makes quartz countertops, is scheduled to release third-quarter results on Nov. 6 before the market opens.

Total option volume in the name exceeded 4,100 contracts on Friday, 16 times its daily average for the last month. Overall calls outpaced puts by 5.5 to 1, a reflection of the session'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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