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Trinity Industries sees call buying

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Trinity Industries drew bullish option activity yesterday as shares surged more than 10 percent with strong quarterly numbers.

More than 2,400 April 70 calls traded in a strong buying pattern yesterday for premiums from $1 to $1.85 yesterday, according to optionMONSTER's Heat Seeker tracking system. These are clearly new positions, as open interest in the strike was just 85 contracts before the session began.

These long calls lock in the price where the stock can be purchased through mid-April no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, but the contracts will expire worthless with shares below $70. (See our Education section)

TRN jumped 10.14 percent to close at $66.91 yesterday. The industrial manufacturer gapped higher in the morning and reached a new 52-week high of $67.62 after beating estimates on earnings and revenue while raising guidance above expectations.

Total option volume in the name topped 11,000 contracts yesterday, more than 11 times its daily average for the last month. Overall calls outpaced puts by 2 to 1.

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