3D Systems hit our tracking systems early yesterday, and traders cleaned up in a hurry.
Large blocks of short-term calls appeared in the former high-flying tech name minutes into the session. The Weekly 55 calls expiring this Friday led the flow, with the initial blocks fetching $0.70 to $1.33.
These long calls lock in the price where the three-dimensional printing stock can be purchased, letting investors cheaply position for a rally. They can also generate significant leverage, which is exactly what happened yesterday. (See our Education section)
DDD was up 3 percent when we posted our initial alert and continued higher throughout the session, ultimately closing with a 7.29 percent gain at $57.23. But that appreciation was insignificant compared with the calls , which more than doubled to $2.60 by the closing bell.
The stock rallied about 800 percent between the start of 2012 and the beginning of this year, only to see half its value erased when the Nasdaq pulled back in the spring. Short interest represents about one-third of the float, which could trigger buying in the name.
More than 7,000 of the Weekly 55s were bought by the end of the session, dwarfing the previous open interest of 1,173 contracts and therefore representing new positions. Some 4,100 Weekly 60 calls were also bought, mostly for $0.15 to $0.35.
Overall option volume in the name was 6 times average amounts, with calls accounting for a bullish 75 percent of the total.
(A version of this post appeared on InsideOptions Pro yesterday.)
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