U.S. Markets close in 1 hr 25 mins

BMC Software targeted again by bulls

David Russell (david.russell@optionmonster.com)

The bulls are coming back to BMC Software.

Traders were buying in the April 40 calls on Monday, as Pete Najarian reported on InsideOptions Pro , and yesterday attention turned to the May 45s. The Heat Seeker shows that a single large block of 10,000 contracts priced for $0.23, followed by subsequent prints for $0.25 and $0.30. Volume was more than 100 times open interest in the strike.

Long calls lock in the price investors must pay for the stock, which gives them major leverage on a percentage basis in the event of a rally. But should the shares fail to move, those options will expire worthless. (See our Education section)

BMC rose 0.65 percent to $38.75 yesterday. The corporate software maker has been trying to work its way higher since early January but remains trapped below its 200-day moving average. Management raised earnings guidance on Feb. 1, drawing buyers to the stock.

Overall option volume in the name was 19 times greater than average in the session. Calls outnumbered puts by 44 to 1.

(A version of this post appeared on InsideOptions Pro yesterday.)

More From optionMONSTER