Options Trading News

July 13, 2012  Fri 12:16 PM CT

Rock-Tenn has been on a tear this week, and one trader is betting that there are more gains to come.

RKT is up 2.41 percent to $58.15 in afternoon trading, well off the session peak of $59.87 at its 200-day moving average but continuing a sharp run higher since closing at $53.30 on Tuesday. Shares of the company, which makes packaging products, are up some 16 percent since hitting an eight-month low of $49.24 on June 4.

Total option volume in the name is 2,353 so far, 6 times its daily average, and only 30 of them are puts. Nearly all of this activity is in the July 60 calls, according to optionMONSTER's Heat Seeker system.

About 2,000 of those calls were bought, including a print of 1,565 that went for $0.70. Open interest in the strike was just 578 contracts at the start of the session, indicating that these are new positions.

These long calls are betting that RKT will gain roughly 4 percent by the time they expire in a week, on July 20. The company is scheduled to report earnings results in the pre-market of July 25. (See our Education section)
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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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