Options Trading News

February 21, 2013  Thu 11:10 AM CT

Family Dollar Stores is fighting its way higher against a tough market today, and traders are looking for more upside.

More than 2,200 March 57.50 calls traded in a strong buying pattern this morning as premiums rose from $0.75 to $1.30, according to optionMONSTER's Heat Seeker system. The volume was more than 3 times higher than the strike's open interest before the session began, clearly showing that this is fresh buying.

FDO is up 2.82 percent to $56.42 in early afternoon trading after dipping to $54.06 yesterday, just $0.64 above its 52-week low. Discount retailers have lagged the S&P 500 by more than 12 percent in the last three months, according to our researchLAB service.

Today's call buying, which locks in the price where traders can buy shares, is looking for FDO to continue rallying through mid-March. But those contracts will expire worthless if the stock stays below the $57.50 strike price. (See our Education section)

The call activity has pushed total option volume in the name past 3,200 contracts, more than double its daily average for the last month. Calls outnumber puts by 5 to 1 so far.
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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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