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Traders Bet US Airways Will Take Off

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- If option traders are right, US Airways (LCC) may be preparing to roll down the runway and fly higher.

OptionMonster's tracking systems showed heavy activity in the January 15 calls Wednesday, plus the February 16 calls. The big trades were selling in the January 15 calls for 63 cents and buying in the February 16s for 85 cents.

Calls lock in the price investors must pay to buy shares, so they can generate significant leverage when their underlying stock moves. But these options also lose value as expiration approaches, so Wednesday's trader rolled a January position forward by a month to avoid that time decay.

The trader paid about 22 cents and now has an additional month of upside exposure in the airline. U.S. Airways' stock fell 0.2% to close at $15.13 Wednesday, but earlier in the session it climbed to $15.50 -- its highest price in almost five years. More than 57,000 contracts traded in the session, about six times more than average. Calls outpaced puts by 48,000 to about 9,000, which further reflects the session's bullish sentiment.

Najarian owns LCC calls

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.

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