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Bemis calls look for a breakout

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Traders are betting that Bemis will break out of its recent range.

About 2,300 April 40 calls were bought for $0.44 to $0.70 yesterday, according to optionMONSTER's Heat Seeker tracking system. Previous Open interest in the strike was just 263 contracts, indicating that new positions were established.

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 remain below $40. (See our Education section)

BMS rose 0.2 percent to $39.27 yesterday. The packaging company fell sharply after reporting fourth-quarter results on Jan. 30 but bounced off the $37 level a week later. The stock has been trading in an increasingly tight range since then, encountering resistance at its 200-day moving average.

Yesterday's call buying made up about 90 percent of BMS' total volume of 2,575 options, which stand in stark contrast to its daily average of just 29 contracts for the last month. Only 3 puts changed hands in the session, a reflection of the bullish sentiment.

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