Nucor bulls clean up as steel makers rally
Nucor traders are up more than 700 percent, the latest of several huge winners detected by our Heat Seeker program in recent sessions.
We cited buying in the steel maker's September 56 calls on Friday for $0.21. NUE is up 4.6 percent to $58.18 in afternoon trading, and those same contracts have soared to $1.78.
There were even bigger fireworks earlier this week in Avanir Pharmaceuticals, which also saw bullish positioning on Friday . Its October 8 calls, purchased for just $0.35 to $0.50, shot up after the company reported positive data for its potential Alzheimer's drug and are now offered for $4.50. That's a gain of almost 1,000 percent in less than a week, as AVNR is up 2.24 percent to $12.33.
It works because long calls lock in the price where investors can buy a stock, letting them control only the rally. They will lose money if shares fall, but no more than their initial outlay. Given how cheap they are relative to the underlying stock, options can also generate significant leverage. (See our Education section)
There have been other big winners as well. optionMONSTER co-founder Pete Najarian, for instance, cited the buying in Potash's September 34.50 calls one week ago for about $0.20. The fertilizer stock has been rising since and those contracts have tripled to $0.82. POT is currently up 0.17 percent to $35.32.
Molson Coors was another homerun. Heat Seeker detected activity in the October 72.50s and the October 75s on Friday . Traders were knocked back profits of 300 percent to 400 percent on Monday after merger talk among beer brewers triggered rallies across the industry. TAP is off 0.84 percent to $76.81 in afternoon trading.
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