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May 17, 2013  Fri 3:16 AM CT

Renren is drawing bullish option action for the second time in as many weeks even as shares of the Chinese social-media company continue to falter.

optionMONSTER's Heat Seeker system detected the purchase of 3,000 October 2.50 calls in less than 2 minutes yesterday, led by a print of 2,800 that went for $0.70. This is clearly a new position, as open interest in the strike was just 535 contracts before the session began.

RENN was down 1.05 percent to close at $2.82, less than half of where it was trading a year ago and a fraction of its IPO peak at $24 in May 2011. Shares have been range-bound for the last three months but fell after the company released quarterly results Monday night.

Yesterday's long calls are looking for RENN to rise above $3.20 before the contracts expire in mid-October. These options, which lock in the purchase price of the stock, will track the share price closely because they are in the money. (See our Education section)

The activity follows bullish call buying in the July 3.50 strike on May 6 as traders began to focus on the Chinese Internet sector for the first time in months. Yesterday the Heat Seeker also flagged upside option action in Beijing-based Youku Tudou, a streaming-video company.

Total option volume in Renren yesterday was 4.5 times higher than its daily average for the last month. Only 63 puts changed hands in the session, another sign of the day's bullish sentiment.
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