Market News

November 29, 2016  Tue 10:20 AM CT

Traders are looking for Restoration Hardware to rally by Christmas.

OptionMonster's market scanner shows that more than 2,700 December 40 calls were purchased mostly for $1.30 to $1.50. This represents fresh buying, as volume surpassed open interest of 794 contracts.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

RH is up 2.21 percent to $36.46 in morning trading and has risen 27 percent in the last month. The home-furnishings retailer is expected to report earnings after the close on Dec. 8.

Overall option volume is about average in RH so far today, but calls outnumber puts by a bullish 12-to-1 ratio.

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