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Long-term calls dial CenturyLink

Mike Yamamoto (mike.yamamoto@optionmonster.com)

A trader is looking for CenturyLink to move higher in the long term.

optionMONSTER's Heat Seeker system shows that 2,500 January 2016 40 calls were purchased in one block for $1.90 on Friday. This is clearly a new position, as the volume was well above the previous open interest in the strike.

These long calls lock in the price where the stock can be purchased through early 2016 no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $40. (See our Education section)

CTL slipped 0.73 percent to $36.91 on Friday. The telecommunications company spiked higher a month ago on strong quarterly results, hitting a 52-week high of $38.21 on May 16, but has been trading sideways since then.

Total option volume in CTL was below average on Friday, but overall calls outnumbered puts by more than 2.5 to 1.

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