Options Trading News

November 26, 2013  Tue 5:16 AM CT

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.)

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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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