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Short-term bulls piling into Alcoa

Alcoa is bucking this morning's market selloff, and short-term traders are following suit.

optionMONSTER's Heat Seeker system shows detected heavy buying in the Weekly 13 and 13.50 calls expiring at the end of Friday's session. More than 5,600 of the 13s traded for $0.41 to $0.57 while 9,000 13.50s went for $0.07 to $0.17 this morning. Volume was far above open interest in both contracts, indicating that new money is at work in the trades.

These long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back. (See our Education section)

AA is up 0.37 percent to $13.53 in early trade. The aluminum producer is down some 15 percent this year but has been trapped in an extremely tight range since reporting earnings on April 8.

Overall calls are outnumbering puts by a bullish 32-to-1 ratio so far today.


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