United Rentals has pulled back to key support, and the bulls are stepping in.
optionMONSTER's Heat Seeker monitoring program detected the purchase of some 3,500 August 50 calls for $3.10 and $3.20. Volume was almost 10 times previous open interest at the strike, showing that new money was put to work on the long side.
Long calls lock in the price where shares can be purchased in the equipment-rental company, which has consistently beaten expectations in quarterly results. Because they are relatively inexpensive compared with the stock price, calls have the potential to generate significant leverage. (See our Education section)
URI is up 2.37 percent to $49.26 in morning trading. It rose more than 500 percent between mid-2010 and early last month but has been skidding lower since. The shares are now back near the same level where they peaked in 2012, plus their 200-day moving average, which could make some traders think that they're ready to bounce.
Total option volume is almost twice the daily average, with calls outnumbering puts by almost 7 to 1.
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