Nationstar Mortgage is attracting bullish option activity as it reaches new highs ahead of its earnings report next week.
optionMONSTER's Heat Seeker system shows that 1,382 August 50 calls traded in a strong buying pattern in less than 2 minutes yesteday for $0.65 and $0.70. Volume was far above the open interest of just 276 contracts before the trade appeared, indicating that this is a new position.
These long calls lock in a $50 purchase price for the stock no matter how far it might rise by expiration in 2-1/2 weeks. But the contracts will quickly lose value if NSM doesn't move soon, and they will end up worthless if shares remain below that level. (See our Education section)
NSM rose 0.67 percent to $46.43 yesterday, an all-time closing high and just off its lifetime peak of $46.94 reached last Friday. is attracting bullish option activity as it reaches new highs ahead of its earnings report next week. The mortgage-servicing company was hit hard when the broader market sold off last month, dropping from above $42 to the $36 level on June 19-24, but its shares have since erased all those losses.
The company is scheduled to report second-quarter results next Tuesday, Aug. 6, eight sessions before yesterday's calls expire.
Total option volume in the name yesterday was double its daily average of the last month. Overall calls outnumbered puts by more than 3 to 1.
Our scanners also detected bullish call buying yesterday in Fortress Investments , whose largest holding is a stake in Nationstar.
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