Manitowoc bulls not backing down

optionMONSTER

Manitowoc is back to long-term resistance, and the bulls aren't backing down.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 February 25 calls for $0.75 and the sale of 2,000 January 22 calls for an average premium of $1.625. Volume was below open interest at the lower strike, which suggests that an existing position was closed and rolled forward in time.

The investor received $137,500 by making the adjustment and now has an additional month to benefit from gains through the new long calls in the maker of cranes and commercial refrigerators. He or she probably bought the 22s when the stock was lower and is now locking in profits. (See our Education sectionfor more on how to manage positions more effectively with options.)

MTW rose 0.82 percent to $23.43 on Friday and is up 50 percent to far this year. It's been pushing through the level where it peaked in 2011, which could make some chart watchers think that it's breaking out.

The company's last two earnings reports have beaten expectations despite weak revenue, thanks to cost cutting. Its next release will probably fall in late January, so those February 25s will also let the trader benefit if the quarterly results are strong.

Total option volume was more than twice the daily average in MTW on Friday, with calls outnumbering puts by 18 to 1.


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