U.S. Markets closed

Bulls targeting CenturyLink on pullback

David Russell (david.russell@optionmonster.com)

CenturyLink has been falling all year, but now the bulls are stepping in.

optionMONSTER's Heat Seeker tracking system detected the purchase of more than 4,000 July 41 calls on the telecom stock for $1.15 and $1.20. Some 2,300 January 2013 40 calls also changed hands for $3.40. Volume was more than four times the open interest at both strikes.

CTL ended the session down 0.27 percent to $40.12. The stock double-topped at a three-year high of around $46.75 in early January before heading lower.

In the process of the move, the shares lost 13 percent of their value. Now the shares have returned to their 200-day moving average (purple line on chart at right), where some tradres may expect buyers to return.

The company is in the midst of purchasing Qwest Communications in an all-stock transaction and is waiting for approval from the governments of all the states involved. It also issued weak profit guidance the last time it reported earnings on Feb. 15.

Overall option volume in CTL was 4 times greater than average yesterday, with calls outnumbering puts by 13 to 1, according to the Heat Seeker.

(Chart courtesy of tradeMONSTER )

CTL