PPG Industries has been muscling higher, and one big investor is looking for the move to continue.
On May 28, optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 July 200 calls in the chemical company for $5.40 to $6.70. The stock has inched higher since, inflating the value of those contracts, and yesterday the trader adjusted the position.
This time, he or she sold those July 200s for $8.30 and bought 4,000 July 210 calls for $3.60, recovering $630,800 of capital while staying positioned for further potential gains.
These long calls lock in the price where the stock can ultimately be purchased, letting the investor cheaply position for a rally. They provide upside leverage while limiting risk, but the contracts could quickly lose value if shares drop. (See our Education section)
PPG fell 0.10 percent to $205.60 yesterday. It's doubled since mid-2012, fueled by strong demand for its coatings from automotive and aerospace customers.
Total option volume in PPG was 14 times greater than average in the session, with overall calls outnumbering puts by more than 60 to 1.
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