A large trader is apparently betting that IMAX will report strong quarterly results next month.
optionMONSTER's Heat Seeker system detected the purchase of 5,000 February 29 calls in one print for $0.43 yesterday. This is clearly a new position, as open interest in the strike was just 309 contracts before the trade appeared.
These long calls lock in the price where the stock can be purchased for the next three weeks no matter how far it might climb. They could be sold earlier if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $29. (See our Education section)
The theater-technology company is scheduled to report fourth-quarter results before the market opens on Feb. 20 , a day before that month's calls expire.
IMAX gained 1.79 percent to $27.36 yesterday, just below its 200-day moving average. The stock had fallen sharply since hitting resistance above $31 in December, but shares bounced at the $27 level on Wednesday.
Total option volume in the name topped 6,600 yesterday, more than 32 times its daily average of just 204 contracts in the last month. Only 242 puts traded in the session, a reflection of the day's bullish sentiment.
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