OptionsHouse

Options Trading News

March 26, 2013  Tue 2:33 AM CT

NOC: SEE CHART GET CHAIN FIND STRATEGIES
Northrup Grumman has been powering higher, and one investor is upping the ante.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,000 August 72.50 calls for $1.18 and the sale of 2,500 April 70 calls for $0.31. Volume was below open interest at the lower strike, which suggests that an existing position was closed and rolled forward in time.

The trade is especially bullish because the investor doubled the number of contracts owned and put an additional $512,500 to work. He or she probably bought the 70s earlier in the month when the defense contractor was lower and now wants to adjust it before time decay erodes their value. (See our Education Section.)

NOC fell 0.21 percent to $67.91 yesterday. The stock has been trading in a range since last summer, but has been grinding higher this month after finding support bear its 200-day moving average.

Total option volume was 12 times greater than average in the session, according to Heat Seeker. Calls outnumber puts by a bullish 229-to-1 ratio.
Share this article with your friends


OptionsHouse

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »