Smith International Draws Call Buyers

By Jon "DRJ" Najarian, co-founder of OptionMonster

NEW YORK (TheStreet) --

Bullish traders were piling into Smith International (SII Quote) Tuesday, apparently betting that the Houston-based oil services company will break through resistance levels that have been in place for months.

The stock finished the regular session Tuesday up 5.8% to $29.79 and rose to $30.28 in after-hours trading. The shares haven't closed above $30 since June 12, having tested that level and pulling back a month ago.

Options activity blew away the average volume of 1,000 calls a day, showing more than 27,400 traded by the end of the session on OptionMonster's proprietary tracking systems. About 22,000 of those calls changed hands at the November 32 strike, most of them bought at the asking prices between $1.20 and $1.60.

There was zero open interest at the strike because these options just came online Monday following Friday's expiration, so this is fresh buying with conviction. The stock needs to rise more than 12% by late November for these calls to turn a profit.

Total calls at all strikes outnumbered puts by more than 6-to-1, another bullish indication.