Options Trading News

February 28, 2013  Thu 3:47 AM CT

Pitney Bowes is down sharply this month despite a strong earnings report, and one large trader is betting that the stock is due for a bounce.

More than 10,000 July 14 calls traded in a strong buying pattern in the final half-hour of yesterday's session, led by two prints of 4,451 that went for $0.55 and $0.50, according to optionMONSTER's Heat Seeker tracking system. Open interest in the strike was just 1,737 contracts before the day's trading began, so this is clearly fresh buying.

PBI rose 1.54 percent yesterday to close at $13.17, crossing back above its 200-day moving average. The mail-processing equipment company gapped up from below $12 at the end of January after reporting beating fourth-quarter estimates and declaring a $0.37 quarterly dividend, but the stock then fell sharply in the next two sessions.

Yesterday's long calls, which lock in the price where traders can buy shares, are looking for PBI to gain roughly 10 percent or more by mid-July. These options could be sold earlier at a profit if their value rises with any rally before then, but they will expire worthless if the stock remains below the $14 strike price. (See our Education section)

Overall calls at all PBI strikes totaled 10,456 yesterday, compared with just 565 puts.
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