OptionsHouse

Options Trading News

October 24, 2013  Thu 12:08 PM CT

CX: SEE CHART GET CHAIN FIND STRATEGIES
Construction is getting back in gear, and traders are playing the trend with cement giant Cemex.

optionMONSTER's Heat Seeker system shows that volume picked up early in the December 10 calls. The large initial blocks priced for $1, followed by prints for $1.30 later in the morning. Almost 4,600 contracts traded, compared with previous open interest of just 309 contracts.

These long calls lock in the price where shares can be purchased, letting investors cheaply position for a rally. Today's trade is especially noteworthy because they used in-the-money contracts that will closely track movement in the underlying stock price. (See our Education section)

CX stood at $10.55 when the calls hit, but then it started moving and is now up 3.02 percent to $10.90 in afternoon trading. It spent most of the month consolidating around the same $10.50 level that was resistance in February, which could make some chart watchers think that it's ready to start rallying again.

The stock appreciated almost 500 percent between late 2011 and May 2013 as homebuilders rose. The entire group has been consolidating for months, and traders are looking for a continuation of that earlier move. (See our researchLAB service to analyze the performance of more than 100 industry groups over different time frames.)

Interest rates have been falling in the last month, promising to increase home affordability. PulteGroup, the largest builder by revenue, also reported strong results today and expressed confidence demand will improve.

Total option volume in CX is triple the daily average so far today, according to the Heat Seeker. Calls outnumber puts by a highly bullish 7-to-1 ratio.
Share this article with your friends


Related Stories

CX

Cemex traders chase bearish trend

January 15, 2016

The Mexico-based cement maker has lost nearly half its market value in the last three months, and traders are looking at more downside potential.

OptionsHouse

TRADING WEEKLY OPTIONS

The fastest money in the market
View full report »

Premium Services

Upcoming Webinar:

Using Options For Income

http://bit.ly/1nY1OKA

Jon Najarian and Adam Mesh of Options Wealth Machine discuss a detailed strategy utilizing credit spreads to generate income, and how any level of trader can use this simple trading technique.

Education & Strategy

Sweet Spot Exceptions

As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

View more education articles »