Options Trading News

September 3, 2013  Tue 4:06 AM CT


Traders want to get a bang from gunpowder stock Olin.

optionMONSTER's tracking programs detected unusual activity in the maker of Winchester ammunition. The first big blocks hit in the October 25 calls, with investors paying $0.20. More than 1,400 would trade against previous open interest of just 10 contracts.

Calls lock in the price where shares can be purchased, giving them potentially significant leverage to a rally. And that's exactly what happened, because OLN inched higher and those contracts almost doubled to $0.40. (See our Education Section.)

Later in the session, buyers snapped up more than 2,000 November 25 calls, this time pushing premiums from $0.40 to $0.55. Volume also surpassed previous open interest of 1,468 contracts, indicating that new money was put to work on the long side.

OLN rose 0.13 percent to $23.10, and is trying to work its way higher from the bottom of its recent trading range. Total option volume was almost 10 times greater than average in the session, with calls outnumbering puts by a bullish 31-to-1 ratio.

(A version of this post appeared on InsideOptions Pro on Friday.)

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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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