Traders are looking for Richie Brothers Auctioneers to continue its bullish momentum in coming weeks.
Call buying began early in RBA's April 25 strike, with premiums starting at $0.35 and rising quickly before peaking at $1.10 by late morning, according to optionMONSTER's Heat Seeker tracking system. More than 4,500 of the calls were purchased in what were clearly new positions, as open interest was just 30 contracts before the session began.
These long calls lock in the price where the stock can be purchased through mid-April no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless if shares are below $25 at expiration in 2-1/2 weeks. (See our Education section)
RBA rose 3.23 percent yesterday to close at $24.91 after climbing to $25.73 earlier in the session, its highest price since February 2012. The Canadian-based company, which sells trucks and industrial equipment through physical and online auction sites, fell after its last quarterly report on March 3 but found support at the $22 level about a week later.
Total option volume in the name was just shy of 5,100, dwarfing its daily average of a mere 11 contracts in the last month. Overall calls outnumbered puts by a bullish 16-to-1 ratio.
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