Computer Sciences attracts bulls
Traders are apparently banking on positive quarterly results from Computer Sciences next month.
More than 2,100 August 70 calls were purchased for $1.45 to $1.65 on Friday, according to optionMONSTER's Heat Seeker tracking system. This represents new positions, as open interest in the strike was only 337 contracts before the session began.
These long calls lock in the price where the stock can be purchased through mid-August no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $70 for the next five weeks. (See our Education section)
CSC was down 0.44 percent on Friday to close at $67.50. The technology-service provider has been trading in an increasingly narrow range since February but broke back above its 50-day moving average last week.
The company is expected to announce quarterly results in early August, about two weeks before Friday's long calls expire.
Overall option volume in the name on Friday was 10 times its daily average for the last month. Total calls outnumbered puts by a bullish 6-to-1 ratio.
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