U.S. Markets closed

Traders give Alcatel more room to run

David Russell (david.russell@optionmonster.com)

Alcatel-Lucent has been on fire, and traders remain enamored of the name.

optionMONSTER's tracking systems detected heavy call volume in the Paris-based maker of telecom gear, which has rallied more than 70 percent since securing a key loan package in December. It rallied again on yesterday after announcing cost cuts and potential asset divestitures.

Today's trader appears to own shares and is adjusting a covered-call strategy in hope of further upside. He or she bought back 2,659 September 2 calls they had previously sold for $0.25, and sold a matching number of January 3 calls for $0.30. They collected a credit of $0.05 and now have the right to earn $1 more from the stock going higher. (See our Education section)

ALU is up 1.04 percent to $1.95 in morning trading and is hovering near its highest level since April 2012. In addition to restructuring, the company may benefit from an increased telecom investment cycle later this year--something that has been suggested by strong results from companies such as Ciena and Finisar. (See researchLAB for more)

Today's transaction pushed total option volume to almost twice the daily average in the name.

More From optionMONSTER