By David Russell, reporter at OptionMonster
NEW YORK -- CarMax (KMX) popped on a Credit Suisse upgrade Friday and option traders are looking for more.
OptionMonster's tracking programs detected the purchase of about 4,000 November 34 calls for 60 cents and 65 cents. Volume was more than six times open interest at the strike, indicating that new money was being put to work.
Those calls lock in the price where investors can buy shares in the automobile retailer. These options can generate some nice leverage in the event of a rally, but they will expire worthless if the stock fails to move.CarMax ended the session up 2.41% to $33.57. It's been shuffling in a range for the last two years but has been gaining since June despite two weak earnings reports. In upgrading the stock to outperform from neutral, Credit Suisse said results could improve and set a $42 target price. Overall option volume in the name was more than six times the daily average, with calls outnumbering puts by 8-1. Russell has no positions in KMX.