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Call buyers are dialing up Ericsson

David Russell (david.russell@optionmonster.com)

Ericsson has not seen much unusual option activity in recent years, but yesterday the Swedish name drew heavily bullish trades.

optionMONSTER's Heat Seeker tacking program detected the purchase of about 6,900 January 14 calls for $0.30 and $0.35. Volume was more than 30 times the previous open interest in the strike, which indicates that new money was put to work.

These long calls lock in the price where a stock can be bought, letting investors position for a rally at limited cost. They can generate significant leverage if the stock moves in the right direction but can lose value if shares stall or decline. (See our Education section)

ERIC rose 1.45 percent to $12.62 yesterday. The Stockholm-based telecom-equipment company gapped higher following its last quarterly report in July, pulled back, and then bounced at its 50-day moving average. Yesterday's call buyers are looking for more gains heading into early next year and are targeting the same $14 area where the stock peaked last September.

Overall option volume in the name was 28 times greater than average in the session, with calls accounting for a bullish 96 percent of the total.

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

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