Call buyers stay with agriculture fund
David Russell | email@example.com
optionMONSTER's Heat Seeker tracking system detected the purchase of 3,500 June 27 calls in the PowerShares DB Agriculture Fund for $0.60. An equal number of May 27 calls was sold at the same time for $0.20, but volume was below open interest in that strike.
The DBA is up 1.07 percent to $27.27 in early afternoon trading. It lost more than one-fifth of its value between late August and mid-May but has recovered by more than 3 percent in the last week.
Because the May calls are in the money and expire today, they would exercise at the close and cause the investor to automatically buy the DBA for $27. He or she apparently doesn't want to do that and rolled the position forward by one month instead.
The move cost $0.40 and provides more time for the trade to work. If the stock moves in the right direction, leverage from the long calls could double or triple their premiums from only a modest gain in the fund. (See our Education section)
The DBA's largest holdings include sugar, cattle, and corn. Today's trade pushed total option volume in the name to 13 times the average amount, with calls outnumbering puts by a bullish 34-to-1 ratio.