Call buyer is banking on Bradesco
David Russell | email@example.com
optionMONSTER's Heat Seeker monitoring system detected the purchase of 2,605 November 18 calls for $0.59. The trade came against no previous open interest and dominated activity in the Brazilian lender so far today.
Buying calls locks in the price investors must pay to purchase a stock. These options can generate significant leverage if the stock continues to rally, but they will expire worthless if it fails to move.
BBD is down 0.29 percent to $17.49 in afternoon trading but is up more than 20 percent in the last two months. The stock has been climbing as sentiment improves toward both emerging markets and financials. It's been hovering around its current level since mid-August.
Owning calls will give the investor exposure to a rally at low cost while limiting losses in case the shares reverse lower. (See our Education section for more on how options can be used to manage risk.)
More than 4,000 contracts have traded in BBD so far today, compared with average volume of about 1,100. Calls outnumber puts by a bullish 10-to-1 ratio, according to the Heat Seeker.