Investor upgrades in B/A Aerospace
Mike Yamamoto | [email protected]
optionMONSTER's Heat Seeker system detected the sale of 1,500 August 70 calls for $1 and, at the same time, the purchase of 2,500 September 75 calls for $0.55 on Friday. Volume was below previous open interest in the August options but above it in the September contracts.
This indicates that a trader is rolling a long-call position forward, providing another month to profit from gains in the underlying stock price while taking some money off the table. The transaction is particularly bullish because the trader is also increasing the number of contracts and raising the strike price by $5.
The new calls lock in a $75 purchase price for the stock through mid-September no matter how far it might rise. The options could be sold earlier at profit if their premiums increase with a rally before then, but the contracts will expire worthless if the stock remains below that level. (See our Education section)
BEAV, which makes airliner seats and other interior fixtures, fell 1.36 percent on Friday to close at $69.08. Shares spiked to a lifetime high of $72.48 last Tuesday after the company easily beat second-quarter earnings estimates, but they have drifted lower since then and are now just below their 10-day moving average. B/A saw call buying in the August 75 strike a few days before the quarterly report.
Friday's call roll made up almost all of BEAV's option volume on Friday, which was nearly quadruple its daily average for the last month. Only 45 puts changed hands in the session, a further indication of the day's bullish sentiment.