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January 22, 2013  Tue 4:14 AM CT

ODP: SEE CHART GET CHAIN FIND STRATEGIES
Office Depot attracted upside option trading on Friday for the second time in less than a week.

More than 3,600 April 5 calls traded in a strong buying pattern, led by a print of 1,900 that went for $0.20, according to optionMONSTER's Heat Seeker system. The volume was 8 times higher than the strike's open interest of just 451 contracts, clearly indicating that these are new positions.

ODP surged 9.93 percent on Friday to close the week at $4.65. The struggling office-supply retailer is a far cry from its highs over $40 in 2006, but its stock price has tripled since hitting four-year lows last August as the sector continues to show signs of improvement.

The option activity followed call buying at the April 4 strike three sessions earlier. Arch-rival Staples also saw a large bullish trade on Friday.

Friday's long calls, which lock in the price where traders can buy the stock, are betting that ODP will gain roughly 12 percent by expiration in mid-April. The options could be sold earlier for a profit if their premiums rise with any rally before then, but they will expire worthless if the stock is below the $5 strike price at that time.

Total option volume in ODP exceeded 11,600 contracts, nearly 15 times its daily average. Only 891 puts changed hands in the entire session, a reflection of the day's bullish sentiment.

Office Depot is scheduled to report quarterly earnings on Feb. 26.
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