Office Depot attracted upside option trading on Friday for the second time in less than a week.
More than 3,600 April 5 calls traded in a strong buying pattern, led by a print of 1,900 that went for $0.20, according to optionMONSTER's Heat Seeker system. The volume was 8 times higher than the strike's open interest of just 451 contracts, clearly indicating that these are new positions.
ODP surged 9.93 percent on Friday to close the week at $4.65. The struggling office-supply retailer is a far cry from its highs over $40 in 2006, but its stock price has tripled since hitting four-year lows last August as the sector continues to show signs of improvement.
The option activity followed call buying at the April 4 strike three sessions earlier. Arch-rival Staples also saw a large bullish trade on Friday.
Friday's long calls , which lock in the price where traders can buy the stock, are betting that ODP will gain roughly 12 percent by expiration in mid-April. The options could be sold earlier for a profit if their premiums rise with any rally before then, but they will expire worthless if the stock is below the $5 strike price at that time.
Total option volume in ODP exceeded 11,600 contracts, nearly 15 times its daily average. Only 891 puts changed hands in the entire session, a reflection of the day's bullish sentiment.
Office Depot is scheduled to report quarterly earnings on Feb. 26 .
More From optionMONSTER
- Call buyers are playing for gains in Glu
- Patterson UTI gets vote of confidence
- What's behind big put activity in BMC
- Office Depot