Options Trading News

October 25, 2013  Fri 10:52 AM CT

Olin has fallen in recent months but is attracting bullish option activity before its earnings report next week.

More than 2,100 December 25 calls were purchased for $0.20 to $0.29 this morning, according to optionMONSTER's Heat Seeker tracking system. These are clearly new positions, as open interest in the strike was a mere 15 contracts before the trades appeared.

These long calls lock in the price where traders can buy the stock through mid-December no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but they will expire worthless if shares remain below $25. (See our Education section)

OLN is down 1.22 percent to $21.87 in midday trading. The ammunition and chemical company, which includes the Winchester brand, has pulled back since trading above $25 in early August and has been unable to break back above its 50-day moving average since then.

Management is scheduled to release third-quarter results on Monday after the close.

Total option volume in OLN tops 3,200 contracts so far today, already more than 6 times its daily average for the last month. Calls outnumber puts by a bullish ratio of 13.5 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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