Options Trading News

May 29, 2013  Wed 3:16 AM CT

Bullish traders are looking for Neonode to break by early next year.

optionMONSTER's Heat Seeker system shows that 1,630 January 8 calls were purchased yesterday, mostly for $0.50. This is clearly fresh buying, as open interest in the strike was just 4 contracts before the session began.

These long calls, which lock in the price where traders can buy shares no matter how far they might rise, are betting that NEON will rally above $8.50 by mid-January. But if shares remain below the $8 strike price, those options will expire worthless. (See our Education section)

NEON rose 3.85 percent yesterday to close at $5.40, just below its 100-day moving average. The company, which manufactures infrared touchscreens, has been drifting lower since hitting overhead resistance above $6 in the last month.

Overall option volume in the name was nearly 16 times its daily average for the last month. Calls outnumbered puts by a bullish ratio of more than 71.5 to 1.

The company is scheduled to present at the 10th Annual Craig-Hallum Institutional Investor Conference tomorrow and at Cowen's 41st Annual Technology, Media & Telecom Conference on Thursday.

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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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