For the second time in a month, the bulls are targeting InterPublic.
optionMONSTER's tracking systems detected the purchase of about 8,400 May 18 calls on Friday, most of which priced for $0.35. There was no open interest at the strike before the trade appeared, which indicates that new positions were implemented.
The investor now has the right to buy shares in the advertising company for $18 through expiration, no matter how high they may trade at the time. That can result in significant leverage if they rally. For instance a 10 percent move in the stock would roughly double the value of the calls. A 20 percent move would translate into profit of 600 percent. (See our Education section)
IPG rose 1.67 percent to $17.04 on Friday and has been making higher lows along its 200-day moving average while hitting resistance at $18. Getting long with calls instead of stock reduces the amount of capital at risk if the shares fail to break out.
Total option volume was 19 times greater than average in the session, with calls by more than 70 to 1. There was also bullish activity in the name on March 10 , when traders sold the October 16 puts and bought the October 21 calls.
(A version of this post appeared on InsideOptions Pro on Friday.)
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