Cemex has pulled back after a big run, and the bulls are noticing.
optionMONSTER's Heat Seeker program detected the purchase of 6,800 October 10 calls for $1.24. Volume was almost twice previous open interest at the strike, indicating that new money was put to work.
These long calls lock in the price where shares can be purchased in the Mexican cement giant, letting investors cheaply control a move to the upside. The contracts can also be used to leverage a rally. For instance, a 26 percent move in the stock would more than double the value of the contracts. (See our Education section)
CX fell 1.43 percent to $10.31 yesterday. The stock doubled between May 2012 and May 2013, only to retreat to the same $10.50 level where it peaked in early 2010 and late January. That could make some chart watchers think that the momentum remains bullish as resistance becomes support.
Overall option volume was triple the daily average in the session, with calls accounting for a bullish two-thirds of the total.
(A version of this post appeared on InsideOptions Pro yesterday.)
(Russell has no positions in CX.)
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