Bulls bet DuPont will keep running
DuPont has run, and bullish traders apparently believe that there's still meat on the bone.
optionMONSTER's Heat Seeker monitoring program detected the purchase of 8,918 January 60 calls for $4.78 and the sale of an equal number of January 57.50 calls for $7. Volume was below open interest at the lower strike, which indicatesthat an existing position was rolled up to the 60s. The transaction yielded a credit of $2.22.
Long calls track movements in underlying stock price because they lock in the level where shares can be bought. Their cheap cost helps manage risk and creates the opportunity for significant leverage. Money can also be moved from one contract to another, as happened today. (See our Coaching session)
DD is up 0.33 percent to $64.48 in afternoon trading and is up 33 percent since the start of October. Most of those gains came after CEO Ellen Kullman was ousted at the urging of activist investor Nelson Peltz. The chemical company's new chief executive, Ed Breen, has taken steps to reorganize business lines, including the consolidation of nylon with Kevlar earlier this week.
Total option volume is triple the daily average with calls outnumbering puts by more than 25 to 1, according to the Heat Seeker.
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