This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

GrafTech Bulls Expect a Rally

By David Russell, reporter at OptionMonster

NEW YORK -- GrafTech International (GTI) doesn't usually trade a lot of options, but Monday it drew unusually heavy bullish activity.

A trader snapped up a block of 3,000 November 10 calls for 35 cents and 40 cents, according to OptionMonster's real-time tracking systems. There was no previous open interest in the strike, clearly indicating that this is a new position. About 300 more contracts were purchased in subsequent transactions.

Those calls lock in the purchase price of shares in the company, whose graphite products are used in an array of industrial applications. The options can generate some nice leverage in the event of a rally, allowing the trader to profit for much less cost than buying the stock directly. But if the shares don't climb, those calls will expire worthless.

The stock fell 0.32% to $9.29 Monday and has been drifting lower since early 2011, when the stock double-topped around $23. It's been attempting to rebound since the summer, especially after earnings and revenue beat expectations in July.

While the date of the next quarterly report hasn't been announced, last year's calendar indicates that results will probably be released in late October. Monday's call buyer probably expects the stock to climb into that news on hopes of another strong report.

GrafTech trades an average of only 71 total options per session, but Monday's activity was 59 times that amount. Calls accounted for 99% of the volume.

Russell has no positions in GTI.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.28 0.00%
FB $81.53 0.00%
GOOG $565.06 0.00%
TSLA $218.42 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports