Late-day buyers target AutoNation

optionMONSTER

Last-minute call buyers piled in to AutoNation yesterday as the car retailer hit all-time highs.

About 3,000 January 55 calls were purchased in the last hour of the session for $2.40 to $2.75, according to optionMONSTER's Heat Seeker real-time tracking system. This is clearly fresh buying, as open interest in the strike was a mere 76 contracts at the beginning of the day.

These long calls lock in the price where traders can buy the stock though mid-January no matter how far it might rise. They could be sold earlier at a profit if premiums gain with a rally before then, but the contracts will expire worthless if shares remain below $55. (See our Education section)

AN rose 3.89 percent to $53.45 yesterday, a new closing high. The stock has jumped $8 in just the last two weeks as auto makers have reported strong sales around the globe.

Total option volume in the name topped 6,000 contracts yesterday, compared with a daily average of just 266 in the last month. Only 613 puts changed hands in the session, reflecting the day's bullish sentiment.


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