Option traders are betting that Digital Generation will rally back up to high end of its recent range in the next two months.
More than 2,900 August 7.50 calls have traded for $0.40 in a strong buying pattern today, optionMONSTER's Heat Seeker tracking system shows. The volume was far above the strike's open interest of just 309 contracts, indicating that these are new purchases.
These long calls lock in a purchase price of $7.90 for the stock through mid-August no matter how far it might rise. But if DGIT remains below the $7.50 strike price, those options could expire worthless. (See our Education section)
DGIT is up 2.16 percent to $7.11 this afternoon, a day after breaking back above its 50-day moving average. The online ad-management firm rose sharply yesterday after regulatory filings showed large insider buying. Shares gapped down from the $9 level after its fourth-quarter report in February and have been trading sideways since then, mostly between $6 and $8.
Total option volume in the name tops 5,100 contracts so far, already 16 times its daily average for the last month. Only 130 puts have changed hands, a reflection of the session's bullish sentiment.
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