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Bulls coming back to Standard Pacific

David Russell (david.russell@optionmonster.com)

Standard Pacific has been consolidating all year, and now the bulls think it's ready to start moving again.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,100 January 8 calls, most of which priced for $1.50. Volume was almost 26 times open interest at the strike, indicating that new money was put to work on the long side.

Long calls lock it the price where shares can be purchased in the California homebuilder. They also have the potential to generate significant leverage if the stock goes higher.

SPF is down 1.3 percent to $8.35 in morning trading. It more than doubled over the course of 2012 as the housing market improved but has been moving sideways since then. The shares bounced at their 200-day moving average earlier this week, which could make some chart watchers think that they're still in a bullish uptrend.

The noteworthy thing about today's activity is that the trader is using an in-the-money strike, which provides him or her with tighter correlation to the underlying share price. (See our Education section for more on how to pick the right strike and expiration to match your expectations.)

Total option volume is slightly above average in the name so far today, with calls outnumbering puts by more than 200 to 1.

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