Buyers seek big payday in Paychex
David Russell | [email protected]
optionMONSTER's Heat Seeker program detected heavy buying in the December 37 calls, with more than 2,500 contracts purchased in volume that dwarfed the previous open interest of just 20 contracts. Premiums rose from $1.22 to $1.40, but most of the options priced in the middle of that range.
These long calls lock in the price where investors can buy shares in the payroll processor, which is parked at its highest level in almost five years. If it breaks resistance and continues to run, those options stand to generate significant leverage. And if it drops, traders will lose much less money than they would owning shares. (See our Education section for more on how options can be used to manage risk.)
PAYX ended the session at $36.41, up 0.78 percent. Its most recent earnings report beat expectations on the top and bottom lines, and the next one will probably be released in late June, based on last year's calendar.
Total option volume was 5 times greater than average in the session, with calls dominating the activity.
(A version of this post appeared on InsideOptions Pro yesterday.)