Options Trading Turns Bullish on Focus Media

By David Russell , reporter at OptionMonster

SHANGHAI (TheStreet) -- Stock and options trading turned bullish on Focus Media (FMCN Quote) Monday as investors bet that the Chinese company will rally by this fall.

OptionMonster's tracking systems detected heavy buying of the October 12.50 calls, which traded 16,660 times for 10 cents and 60 cents. Volume in the strike was more than 14 times open interest.

Focus Media, which sells advertising on video screens and digital billboards, rose 12% to $10.87 Monday. The stock is up 19% in the last month, compared with a 3.3% gain for the iShares FTSE/Xinhua China 25 Index(FXI Quote), an exchange-traded fund that tracks the broader Chinese market. Focus Media is still 58% where it traded a year ago.

The reason for the options action isn't clear. One unsubstantiated report said the company will release earnings soon; the company last reported earnings on June 19. The company is also selling part of itself to Sina(SINA Quote) under an unusual share-distribution plan.

Focus Media needs to climb about 19% by expiration for the October 12.50 calls to turn a profit. Investors also snapped up the September 12.50 calls, betting on a move over the rest of the week. The options traded 5,525 times for 5 cents to 15 cents against open interest of 906 contracts.

The October 10 calls and September 10 calls also attracted inflows, although volume was below open interest in both strikes. Overall options volume in FMCN was 30 times average, with calls outnumbering puts by more than four to one.

-- Reported by David Russell of OptionMonster in New York .