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Buyers chase Flowserve at highs

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Flowserve spiked to all-time highs Friday on strong quarterly numbers, and the bulls wasted no time chasing the name.

optionMONSTER's Heat Seeker system detected heavy buying in the November 70 calls, which began the day at $0.17 but soared all the way to $1.85 after the company beat third-quarter earnings and revenue expectations in the morning. These are clearly new positions, as open interest in the strike was a mere 15 contracts before the session began.

These long calls , which lock in the price where traders can buy the stock, are looking for FLS to continue rallying for the next three weeks. But the contracts, many of which are already in the money after the stock surged on Friday, will quickly lose value if shares stall or pull back. (See our Education section)

FLS reached a lifetime intraday high of $71.49 on Friday before finishing the session up 12.18 percent to $71.22, a record high close. On Oct. 16 Bank of America initiated coverage of the company, which makes pumps and valves for oil and gas producers, with a "buy" rating and a $72 price target.

Total option volume in FLS was just shy of 4,000 contracts, 12 times its daily average for the last month. Overall calls eclipsed puts by 2 to 1.

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