Options Trading News

January 22, 2014  Wed 5:16 AM CT

CIT Group releases earnings next week, and the bulls piled in yesterday.

optionMONSTER's Heat Seeker system detected heavy buying in the February 52.50 calls. The largest block of 4,500 contracts went for $0.42, accounting for more than half the 8,250 that were purchased. Volume was 98 times previous open interest, so new money was clearly put to work.

These long calls lock in the price where shares can be purchased in the small-business lender. They provide cheap exposure to gains and can let investors generate significant leverage in a rally, but the contracts will expire worthless if shares remain below $52.50 through mid-February. (See our Education section)

CIT declined 0.52 percent to $49.64 yesterday, pulling back to its 100-day moving average for the first time in more than a month. Quarterly results come out on Jan. 28, and yesterday's call buyers will profit if the stock gaps higher on a strong report.

Total option volume was 13 times greater than average in the session, with calls outnumbering puts by a bullish 16-to-1 ratio.

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

Related Stories


Is CIT Group getting ready for pullback?

September 30, 2016

The commercial-lending company has surged 19 percent in the last three months, but traders are positioning for a possible drop.



The fastest money in the market
View full report »

Premium Services

Education & Strategy

Using puts to BUY stock

Puts are an options contract that gives buyers the right to sell their stock for a set price on or before a future date. However, puts can also be an effective way to BUY stock.

View more education articles »