Walgreen reached new all-time highs yesterday, and the bulls were looking for even more gains.
optionMONSTER's Heat Seeker tracking system detected heavy buying in the March 65 calls, with premiums more than tripling from $0.55 to $1.68 as the session unfolded. More than 12,000 traded against previous open interest of just 127 contracts, with more than two-thirds of the total trading in a single block of 8,288 that was purchased for the ask price of $0.82.
These long calls lock in the price where shares can be purchased through mid-March at a fraction of the cost of the stock itself. The contracts can provide substantial leverage in profiting from a move higher while limiting the amount of capital at risk. (See our Education section)
WAG surged 5.85 percent to finish yesterday at $64.20 after peaking at $64.71 just minutes before the close. The drugstore chain fell for most of January but bounced off support around $56 early this month, erasing the earlier losses as monthly same-store sales beat forecasts last Thursday. The stock is also up more than 10 percent since being recommended during our exclusive Market Action webinar on Feb. 5.
Total option volume in the name was 8 times its daily average for the last month, with overall calls accounting for a bullish 63 percent of the total.
(A version of this post appeared on InsideOptions Pro yesterday.)
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