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Bulls are coming back to DirecTV

David Russell (david.russell@optionmonster.com)

For the second time in three sessions, the bulls are tuning into DirecTV.

optionMONSTER's Heat Seeker tracking system detected the purchase of 2,000 November 65 calls for $0.59. Equal-sized blocks were sold in the November 55 puts for $0.20 and the November 70 calls for $0.06. That translates into a cost of $0.33.

The investor now stands to collect $5 if the satellite-television stock closes at or above $70 on expiration--profit of more than 1,400 percent, based on their entry price. It would also require a move of less than 14 percent in the share price, which shows the kind of massive leverage that can be achieved with options.

The trade adds to similar activity on Thursday when the November 65/70 call spread was bought. Both transactions look to catch a move between $65 and $70, but today's adds short puts to lower the cost. It also increases risk because the investor must now buy shares in the event of a drop below $55. (See our Education section)

DTV is off fractionally to $61.62 in midday trading. It rallied sharply between late February and mid-May and has been consolidating since. The stock has never traded over $68, so both of the recent trades are targeting a breakout to new highs. Earnings are scheduled for Nov. 5, which could trigger the move.

The bullish activity has pushed total option volume north of 7,300 contracts, which is almost 4 times normal daily volume.

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