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Bulls scale Fortress before earnings

David Russell (david.russell@optionmonster.com)

The bulls are piling into Fortress Investment as two big events loom on its calendar.

optionMONSTER's tracking systems detected the purchase of more than 2,000 March 6 calls, most of which priced for $2.25. Volume was more than 100 times open interest at the strike, indicating that new positions were initiated.

Long calls lock in the price where shares can be purchased in the investment company. Investors use the contracts to position for upside cheaply, to limit capital at risk, and to generate leverage. (See our Education section)

FIG rose 0.25 percent to $7.99 percent yesterday and has more than doubled in the last year. It's been tracking the performance of Nationstar Mortgage, its largest investment, which also saw bullish call buying yesterday. Both companies will report earnings in the next week: FIG tomorrow morning and NSM next Tuesday, Aug. 6.

Total option volume was 8 times greater than average in the name yesterday, with calls outnumbering puts by a bullish 5-to-1 ratio.

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

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