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Lifetime Fitness attracting the bulls

David Russell (david.russell@optionmonster.com)

The bulls are looking for Lifetime Fitness to make another surge to the upside.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 2,500 May 55 calls for $3.90 and the sale of an equal number of May 60 calls for $1.90. Volume was more than 20 times open interest at both strikes, which indicates new positions were initiated.

Known as a bullish call spread , the trade cost $2 and will expand to $5 if the owner of fitness clubs is at $60 or higher on expiration. It works because owning calls locks in the price where a stock can be sold, while selling them generates income and obligates the investor to deliver shares. Combining the two results in a leveraged bet with limited risk. (See our Education section)

LTM fell 0.7 percent to $54.25 yesterday but is up 38 percent since the beginning of August. It initially rallied on news it may become a real-estate investment trust and followed with a strong earnings report in October. Shares hit a seven-year high last month.

The next set of quarterly numbers are due Feb. 26.

Total option volume was 39 times greater than average in the session, almost entirely dominated by calls.


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