Traders are betting on a comeback in Emerson Electric, which is trying to climb from its lowest levels in nearly two years.
About 16,000 April 57.50 calls were bought for $0.35 to $0.60 yesterday, according to optionMONSTER's Heat Seeker tracking program. Volume was well above the strike's previous open interest of 2,739 contracts, showing that new positions were established.
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, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $57.50. (See our Education section)
The trades followed bearish put buying in the June 55 strike that was cited on optionMONSTER's InsideOptions Pro subscription service Feb. 5 . Those contracts have gained in value by more than 10 percent.
EMR rose 0.05 percent to $56.62 yesterday. The factory-equipment maker has been trying to rebound since falling to $54.95 on March 13, its lowest price since July 2013.
Overall option volume in Emerson topped 25,000 yesterday, more than 10 times its daily average for the last month. Total calls outnumbered puts by 6 to 1.
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