Chicago Bridge & Iron has been pulling back hard, but yesterday the buyers stepped in.
optionMONSTER's Heat Seeker scanners detected unusual activity in the May 55 calls, with large blocks purchased for $1.40. More than 5,600 contracts changed hands, clearly new positions because open interest in the strike was just 734 before the session began.
These long calls lock in the price where shares can be bought in the engineering company. Their cheap price can give them significant leverage, letting investors position for a rally at low cost. (See our Education section for other risk-management techniques.)
CBI was down more than 1 percent when the calls hit but then rebounded and closed up 0.17 percent to $52.64. The calls appreciated some 10 percent to $1.55 from that small move.
Earnings come out May 2, and the last report beat on the top and bottom lines. It's down more than 15 percent since late March, so yesterday's traders were apparently looking for a bounce heading into the next release.
Total option volume was twice the daily average in the session, with calls outnumbering puts by more than 5 to 1.
(A version of this post appeared on InsideOptions Pro yesterday.)
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