Options Trading News

September 26, 2012  Wed 3:16 AM CT

Level 3 Communications attracted bullish option activity yesterday.

optionMONSTER's Heat Seeker system shows that 7,000 March 26 calls traded in a strong buying pattern, including a single print that went for $2.20. Open interest in the strike was a mere 12 contracts at the beginning of the day, so these are new purchases.

LVLT fell 1.5 percent yesterday to close at $22.96. The broadband-data company ran from below $18 in late July to resistance near $25 in mid-September and has been drifting lower since then.

If the long calls purchased yesterday are held until expiration in mid-March, the stock would need to gain roughly 23 percent for those contracts to make money. Their premiums could rise before then, however, allowing traders to profit from those calls early and exit the position. (See our Education section)

Total option volume in the name was 11 times its daily average. Calls outnumber puts by a bullish 55 to 1.
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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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