Options Trading News

March 24, 2014  Mon 5:16 AM CT

A large trader is betting that Monsanto will keep climbing into the summer.

More than 12,000 July 120 calls were purchased in the agriculture giant on Friday, most of which priced for $2.84, according to optionMONSTER's Heat Seeker monitoring system. Volume was almost triple the previous open interest in the strike, indicating that new money was put to work.

Long calls lock in the price where a stock can be bought, letting investors cheaply position for a rally without necessarily buying shares. These options can also generate tremendous leverage because of their low initial cost, but they can expire worthless if the stock stalls or pulls back. (See our Education section)

MON fell 0.63 percent to $113.28 on Friday but is up 7 percent since lighting up our scanners in late January. The calls cited at that time--the July 115s--have inflated by more than 60 percent from the same move. The company's next earnings report is scheduled for April 2.

Total option volume in the name was 7 times greater than average in the session, with calls outnumbering puts by almost 9 to 1.

(A version of this post appeared on InsideOptions Pro on Friday.)
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