Options Trading News

Russian metals producer Mechel has been rebounding in recent days, and traders are positioning for more gains in coming weeks.

More than 2,100 October 8 calls were purchased yesterday afternoon for $0.30, according to optionMONSTER's Heat Seeker tracking system. Open interest in the strike was just 414 contracts at the start of the session, so this was fresh buying.

MTL rose 4.93 percent yesterday to $7.45, its highest close since May 3 but still less than half of its 52-week high of $16 reached almost exactly a year ago. Shares of the company, which operates worldwide, broke above several key moving averages a week ago as it spiked higher with other metal miners in anticipation of economic stimulus moves by central banks around the globe.

If the long calls purchased yesterday are held until expiration, the stock would need to rise about 11.5 percent in the next five weeks for them to be profitable. But if the option premiums gain with the stock before then, the traders can sell the calls earlier at the higher prices. If no rally occurs, the calls will expire worthless. (See our Education section)

Overall option volume in the name totaled 2,601, about 7 times its daily average. Calls outnumbered puts by 20 to 1.