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Lowe's bull sees new highs in long term

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Lowe's is trading at multi-year highs after reporting strong third-quarter results this week, and one long-term bet is looking for even more gains.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,700 January 2014 45 calls in a single print for $0.75 on Wednesday. That volume dwarfed the strike's open interest of just 172 contracts at the start of the session, so it was clearly a new position.

LOW rose 0.29 percent to $34.55 on Wednesday after climbing to $34.97 in the previous session, its highest intraday price since February 2007. The home-improvement retailer gapped higher on Monday after beating earnings and revenue forecasts, in part because of rebuilding efforts from Hurricane Sandy, and is now up 40 percent since hitting a recent low of $24.76 in early August.

The long calls bought on Wednesday are counting on the stock to gain more than 32 percent by expiration in January 2014. The trader could sell those options earlier if their premiums rise before then, but the contracts will expire worthless if the stock doesn't rally. (See our Education section)

Total calls in the name outnumbered puts by 5 to 1, a reflection of the session's bullish sentiment.

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