Republic Services is attracting upside option activity ahead of the waste-disposal company's quarterly report next week.
More than 3,500 July 35 calls traded in a strong buying pattern yesterday as premiums doubled from $0.25 to $0.50, according to optionMONSTER's Heat Seeker tracking system. Open interest in the strike was just 10 contracts before the session began, so these are clearly new positions.
These long calls , which lock in the price where traders can buy the stock no matter how high it might rise, are looking for RSG to close above $35 at expiration in mid-July. The options could be sold earlier at a profit if their premiums rise with any rally before then, but the contracts will expire worthless if the stock doesn't move. (See our Education section)
RSG rose 2.15 percent to $31.78 yesterday after climbing to $32.40 earlier in the session, its highest intraday price since May 2011. The stock gapped lower after its last earnings report at the start of November, which missed forecasts on the top and bottom lines, but shares then recovered and began a sharp ascent.
The company is scheduled to report fourth-quarter and year-end results on Feb. 7 after the close.
Yesterday's call buying pushed total option volume in the name to 4,240, more than 40 times its daily average of just 104 contracts in the last month. Only 129 puts changed hands in the entire session, a reflection of the day's bullish sentiment.
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