(The following is an example of notable trading cited on optionMONSTER's InsideOptions Pro service yesterday.)
Traders are looking for a rebound in CBS after media stocks pulled back in recent weeks.
optionMONSTER's Heat Seeker tracking programs showed that 11,000 June 67.50 calls were bought yesterday, mostly for $0.75. Volume was more than twice previous open interest at the strike, indicating that new money was at work in the trades.
These long calls lock in the price where the stock can be purchased through mid-June 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 $67.50. (See our Education section)
Later in the afternoon, about 10,000 January 65 calls were bought for an average price of $3.51 as the same number of January 52.50 puts were sold for about $2.78. Those are highly bullish combination trades that will also profit from a rally but will require traders to buy shares if they fall below $52.50 because of the short puts .
CBS fell 1.67 percent to $59.62 yesterday, touching its 50-day moving average for the first time since January. The stock gapped up from below $58 on strong quarterly numbers in mid-February and ran near $64 last week, not far from its 52-week highs.
The company has not announced the date of its next earnings report, but last year's calendar suggests that results will come out in early May.
Total option volume in the name topped 43,400 contracts yesterday, more than 9 times its full-session average for the last month. Overall calls eclipsed puts by nearly 2 to 1.
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