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Bull likes McGraw-Hill before earnings

Mike Yamamoto (mike.yamamoto@optionmonster.com)

McGraw-Hill is attracting a large bullish position ahead of its earnings report early next week.

About 5,400 November 50 calls were bought in less than 2 minutes this morning, led by a print of 4,700 that went for $5. This is clearly a new position, as the open interest in that strike was a mere 20 contracts before the trade appeared.

These long calls , which lock in the purchase price for the stock no matter how high it might rise, are looking for MHP to rally above $55 by mid-November. They will track the share price closely because they are in the money but will rapidly lose value if the stock fails to climb. (See our Education section)

MHP is up 0.58 percent to $51.85 today, continuing to trade in an extremely tight range this month. The stock plummeted from above $58 to below $43 in early February when the Justice Department told the company that it would file a lawsuit against its Standard & Poor's subsidiary over the credit agency's role in the mortgage crisis. It worked its way back to the $52 level in late March and has been hugging that price since then.

The company is scheduled to release first-quarter earnings results on Tuesday before the market opens and will hold its annual shareholder meeting the next day.

Total option volume in the name has already exceeded 6,700 contracts, more than quadruple its average for a full session. Calls have outnumbered puts by 6 to 1 so far, a reflection of the session's bullish sentiment.

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