Vodafone draws more bottom-fishing
David Russell | [email protected]
optionMONSTER's trade scanners detected the purchase of 5,000 January 25 calls for $0.65. That size was 7 times greater than the strike's open interest at the beginning of the day, signaling fresh buying. Similar trades occurred on Wednesday, when the December 25 calls were purchased for $0.65 to $0.67.
Such long calls lock in the price where investors can buy the stock, making them highly leveraged to a rise in share price. For example, a gain of less than 5 percent will cause those contracts to appreciate by more than 50 percent. However, they will lose most or all of their value if the stock doesn't move. (See our Education section)
VOD fell 1.45 percent to $25.19 yesterday. The global telecom carrier has lost about 15 percent of its value in the last three months and now sits around the bottom of its trading range since late 2010. That could be leading some investors to think that it's ready to bounce.
Calls outnumbered puts by almost 5 to 1 in the session.
(A version of this post appeared on InsideOptions Pro yesterday.)