Delphi Automotive bulls keep faith
David Russell | [email protected]
optionMONSTER's Heat Seeker monitoring program detected the purchase of 1,500 December 57.50 calls for $1.60 and the sale of an equal number of November 55 calls for $2.30. Volume was below open interest in the 55s, which indicates that an existing long position was closed and rolled higher.
Long calls lock in the price were shares can be purchased in the auto-parts maker. Investors use them to cheaply position for a rally, risking only a small amount of the capital that would be in play using stock. Even a modest move to the 52-week high near $60 in the next five weeks will produce significant leverage. (See our Education section)
In the case of today's transaction, they recovered $0.70 and have an additional month to profit from a rally. They waited until the last possible day before expiration to make the adjustment.
DLPH is up 1.38 percent to $57.74 in afternoon trading. The stock gapped lower on Nov. 5 after revenue missed expectations and management lowered guidance, but it has been recovering in recent sessions. Shares are up 82 percent in the last year.
Total option volume is more than 6 times greater than average in the name, with calls outnumbering puts by 24 to 1.