OptionsHouse

Options Trading News

May 24, 2013  Fri 5:15 AM CT

FIG: SEE CHART GET CHAIN FIND STRATEGIES
Fortress Investment pulled back yesterday, and the bulls piled in.

optionMONSTER's Heat Seeker system detected the purchase of 2,200 September 6 calls for $1.25 to $1.40. The volume exceeded the strike's previous open interest of 1,438 contracts, indicating that new positions were implemented.

The investor now has the right to buy shares in the hedge-fund/private-equity company for $6 through expiration. The cheapness of these long calls relative to the stock limits the amount of capital at risk and creates the possibility of significant leverage in the event of a rally. For instance, a 25 percent gain would more than double the value of the options. (See our Education section.)

FIG was unchanged when the trade hit, but it ended the session up 1.84 percent to $7.18. It's been riding a wave of bullish sentiment toward the broader market and also benefits from owning a large slug of high-flier Nationstar Mortgage.

Total option volume was twice the daily average yesterday, with calls outnumbering puts by more than 10 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »