Options Trading News

May 16, 2013  Thu 5:16 AM CT

Call buyers stubbornly returned to EMC yesterday, even through the cloud-computing stock has lagged the rest of the market.

Option traders looked for upside in the June contracts, snapping up almost 16,000 of the 24 calls, with the largest block priced for $0.25, according to optionMONSTER's Heat Seeker monitoring program. The volume was almost triple the strike's open interest before the session began, indicating fresh activity.

Those long calls lock in the price where the stock can be bought no matter how far it might rise. They can provide some nice leveraged gains from even a small pop in the share price over the next month. (See our Education section)

EMC fought back from earlier losses after the calls hit and closed the session up 0.09 percent to $23.02, but it is still down about 10 percent in the last two months. Management also appears at the JP Morgan Technology, Media and Telecom conference this morning, so those buyers are apparently hoping for some positive comments.

Overall EMC calls totaled 25,000 versus just 5,000 puts, a reflection of the day's bullish sentiment.

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