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Buyers take a shot at Deutsche Bank

David Russell (david.russell@optionmonster.com)

Deutsche Bank has been falling for months, but yesterday the buyers stepped in.

optionMONSTER's Heat Seeker monitoring system detected the purchase of about 4,300 May 42 calls for $0.70 to $0.85 against open interest of 2,720 contracts. These contracts dominated activity in the European financial giant and pushed its total option volume to more than 4 times its daily average.

Long calls lock in the price where DB can be purchased in the next four weeks, which can result in significant leverage if the stock appreciates. For instance, a 10 percent move to $44 would translate into a gain of some 400 percent. Investors use the contracts because they are much cheaper than shares, limiting the amount of capital at risk if their directional bet is wrong. (See our Education section)

DB rose 1.5 percent to $39.84 yesterday. It made a 52-week high above $53 in early February and has been skidding lower since. By late March, the stock was at levels last seen in September and it's been holding its ground.

This could be leading some chart watchers to expect a bounce. The company also trades for barely half its stated book value.

Calls outnumbered puts by a bullish 85 percent of the total in yesterday's session, according to the Heat Seeker.

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