By Pete Najarian, co-founder of OptionMonster NEW YORK -- CNO Financial (CNO) hit a four-year high Monday, and the option action was just as hot.
Traders focused on the October 10 calls, which changed hands more than 2,800 times for 35 cents against open interest of 308 contracts, according to OptionMonster's tracking programs. The name is rarely on our systems, so that volume really stood out.
Calls lock in the price in investors must pay to buy shares, so they can deliver some nice leverage in the event of a rally. But if the stock doesn't move, those options will lose most or all of their value.
CNO shares rose 0.5% Monday to close at $10.05, trading at their highest level in about four years. The insurance company has been climbing after announcing a recapitalization plan that could boost earnings. FBR Capital Markets also wrote in a research note not long ago that "CNO is a compelling value play in our opinion with an in-progress capital management story."
About 3,000 CNO calls traded Monday versus just 125 puts, a reflection of the session's bullish sentiment. Total option volume was six times greater than average.
Najarian has no positions in CNO