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Time Warner pullback draws bulls

David Russell (david.russell@optionmonster.com)

Time Warner has fallen sharply this year, but the bulls piled into the media company yesterday.

optionMONSTER's Heat Seeker program detected the purchase of 37,000 March 67.50 calls for $0.52 to $0.64. Volume was more than 500 times the previous open interest in the strike, which indicates that new positions were initiated.

These long calls lock in the price where investors can buy the stock, letting them cheaply position for potential gains. This way they limit the amount of capital at risk and can earn significant leverage if the stock rallies. (See our Education section)

TWX fell 0.69 percent to $62.88 yesterday and is back to its 200-day moving average for the first time since mid-2012. The stock has been pulling back since hitting resistance at the $70 level at the end of last year. Quarterly earnings come out on Feb. 5.

Overall option volume was 33 times greater than average in the session, with calls accounting for a bullish 97 percent of the total.

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

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