Terex has started 2012 with a bang, and one investor expects the upside to continue.
optionMONSTER's Heat Seeker tracking program detected the purchase of 3,000 January 16 calls for $1.55. A block of January 15 calls was sold at the same time for $2.45, though volume was below open interest in that strike.
It appears that an investor previously owned the 15s and is now rolling their position to the 16s. The trader collected a credit of $147,000 while increasing leverage to upside in the shares because he or she now owns more contracts.
The investor probably bought the calls when TEX was trading lower and is now adjusting the trade to reduce some risk. (See our Education section for more on how options can be used to manage portfolio positions.)
TEX is up 3.57 percent to $17.40 in morning trading and is up 29 percent so far this year. The maker of construction equipment and heavy machinery lost more than two-thirds of its value in the 2011 amid worries about the economy, but its last earnings report on Oct. 26 crushed expectations. Guidance was also strong.
Overall option volume in the name is twice the daily average so far in the session, with calls outnumbering puts by more than 160 to 1, according to the Heat Seeker.
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