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October 8, 2013  Tue 4:45 AM CT

DDR: SEE CHART GET CHAIN FIND STRATEGIES
Traders are turning bullish on real-estate investment trust DDR.

optionMONSTER's Heat Seeker system detected heavy buying in the January 15 calls, which traded just shy of 3,000 contracts for $1.35 to $1.40 yesterday. Open interest was just 19 contracts before the trades appeared, showing that these are new positions.

These long calls lock in the price where traders can buy the stock though mid-January no matter how far it might rise. But the contracts, which will track the share price closely because they are in the money, will quickly lose value if the stock doesn't climb soon. (See our Education section)

DDR was up 0.32 percent yesterday to close at $15.81, down 19 percent since its 52-week high reached in mid-May. Shares tried to recover in July but fell again after hitting resistance near $18 and have been trading sideways at current levels for the last several weeks.

Total option volume in the name was just shy of 3,700, compared with a daily average of just 27 contracts in the last month. Only 10 puts changed hands in the session, a reflection of the session's bullish sentiment.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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