OptionsHouse

Options Trading News

November 26, 2013  Tue 5:16 AM CT

NCR: SEE CHART GET CHAIN FIND STRATEGIES
NCR fell sharply after reporting earnings last month, but traders apparently believe they they'll get a chance to ring up some profits in coming months.

optionMONSTER's Heat Seeker system showed that 2,800 January 33 calls were bought, mostly for $2.25 to $2.35. Volume was more than 19 times the previous open interest in the strike, which indicates that new money was put to work.

These long calls lock in the price where investors can buy shares in the maker of ATMs and cash registers, letting them cheaply position for a rebound. Yesterday's contracts are especially noteworthy because they are in the money, which means that they will track the share price closely and give them significant leverage to a rally. (See our Education section)

NCR fell 1.69 percent to $34.38 yesterday. The stock traded for more than $40 before gapping lower on a weak revenue number in late October.

Total option volume in the name was twice the daily average for the last month, with overall 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

Premium Services

Education & Strategy

Using spreads to minimize risk

Last week we discussed the risk vs reward profile of a debit call spread in Wells Fargo (WFC). This week we will run thru the risk vs reward of selling a credit put spread to achieve the same exposure of that debit call spread.

View more education articles »