How the bulls are playing BMC Software

optionMONSTER

BMC Software keeps bouncing, and the bulls apparently think that it could really run.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,000 August 45 calls for an average premium of $2.525. An equal number of August 50 calls were sold at the same time for $0.70. Volume exceeded open interest at each strike, indicating that a new position is being opened.

Known as a bullish call spread , the trade cost $1.825. It will expand to $5 if the stock climbs to $50, which would translate into a profit of 174 percent. (See our Education section for more on how options can be used to generate leverage.)

BMC is off 0.84 percent to $43.61 in afternoon trading. It has stayed above $40 for most of the last year despite mediocre earnings, which could be leading some chart watchers to think that an established group of buyers is supporting the share price.

Total option volume is more than twice the daily average so far in the session, with calls outnumbering puts by 30 to 1.  

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