CenturyLink rose sharply after reporting earnings yesterday, and option traders are looking for even more gains in the next six weeks.
optionMONSTER's Heat Seeker system detected heavy buying as more than 16,000 June 38 calls traded yesterday, with the largest blocks going for $0.30, $0.40, and $0.45. These are clearly new positions, as open interest in the strike was a mere 5 contracts before the trades appeared.
These long calls lock in the price where the stock can be purchased through mid-June no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares remain below $38. (See our Education section)
CTL rose 6.38 percent yesterday to close at $36.86 after first-quarter results beat estimates on the top and bottom lines. The telecommunications company hit an 11-month high of $37.22 earlier in the session, a gain of more than 30 percent from a five-year low of $27.93 reached in early February.
Total option volume topped 42,000 contracts yesterday, more than 13 times its daily average for the last month. Overall calls outpaced puts by 6 to 1, a reflection of the session's bullish sentiment.
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