Bulls eye Navistar for rebound

optionMONSTER

Navistar has fallen hard, and some traders apparently believe that it's oversold.

optionMONSTER's Heat Seeker monitoring program detected the purchase of some 2,500 March 33 calls for $1.15 to $1.40. Volume was more than 100 times open interest at the strike, indicating that new money was put to work on the long side.

These long calls lock in the price where a stock can bought, letting investors cheaply position for a rally. The contracts also generate significant leverage if the stock moves higher but will expire worthless if shares remain below $33 through mid-March. (See our Education section)

NAV is up 3.09 percent to $30.40 in morning trading but has lost more than 20 percent of its value in the last two weeks. The truck maker has returned to a level that had been resistance in June 2012 and again last July, which could make some chart watchers expect that it to become support.

Total option volume is almost twice the daily average in NAV so far, with calls outnumbering puts by more than 4 to 1. There was also buying in the March 30 calls yesterday.


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