Options Trading News

February 7, 2013  Thu 11:39 AM CT

Someone expects another strong quarter from Fleetcor when the company reports earnings this afternoon.

optionMONSTER's Heat Seeker tracking system detected the purchase of 5,000 August 65 calls for $2.15 to $2.30 against open interest of just 14 contracts. Premiums rose as the trades crossed, illustrating a strong buying pattern.

The investor has now locked in a $65 entry price on the stock through August, which will provide him or her with significant leverage in the event of a continued rally. Given the relatively low price of the calls, the trader also has much less capital at risk than in a direct stock purchase. (See our Education section for more on how options can be used to manage risk.)

FLT is down 0.26 percent to $59.74 this afternoon. The provider of specialized commercial payment services is up 63 percent in the last six months amid repeatedly strong results and bullish guidance.

The interesting aspect of today's trade is that it is using calls that expire in August, which will be less likely to depreciate quickly after today's news release. It appears the trader expects a steady rally, even if FLT pauses or pulls back in the near term.

Overall option volume is 33 times greater than average so far today, according to Heat Seeker, with calls accounting for almost 95 percent of the total.
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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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