Options Trading News

August 11, 2014  Mon 3:27 AM CT

Dick's Sporting Goods has pulled back to long-term lows, and the bulls are piling in.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 7,000 September 43 calls, most of which priced for $1.15 to $1.40. Volume was almost 3 times previous open interest at the strike, so new money was put to work on the long side.

Calls lock in the price where investors can the specialty retailer, letting them cheaply profit from a rally. They can also generate significant leverage if shares move in the right direction. (See our Education section.)

DKS rose 1.43 percent to $42.50 on Friday, but is down 27 percent so far this year. Most of that drop came after earnings and revenue missed expectations on May 20. Despite the selling, shares are now back to the same price range where they peaked in 2011. Last week's buyers apparently think they're ready to bounce. researchLAB also shows retailers and consumer-discretionary stocks outperforming the broader market recently.

Overall option volume was 9 times greater than average in the session, with calls accounting for more than 780 percent of the total.
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The art of trading

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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