Options Trading News

October 9, 2013  Wed 4:14 AM CT

Traders are looking for Fortress Investment Group to rally in the next two months.

More than 4,400 December 7 calls traded for $1.05 in a strong buying pattern yesterday, according to optionMONSTER's Heat Seeker tracking system. The volume was 10 times the strike's previous open interest of 439 contracts, showing that these are new positions.

These long calls, which lock in the price where traders can buy the stock, are betting that FIG will rise above $8.05 before they expire in mid-December. But the contracts, which will track the share price closely because they are in the money, will rapidly lose value if FIG doesn't climb soon. (See our Education section)

FIG fell 1.77 percent yesterday to close at $7.77 after bouncing off its 50-day moving average earlier in the session. The hedge fund and private-equity company spiked to a five-year high of $8.19 on Sept. 19 but has been trapped in a tight range since then.

Total option volume in the name topped 7,700 contracts yesterday, 13 times its daily average for the last month. Overall calls outpaced puts by about 5 to 1, reflecting the session's bullish sentiment.
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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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