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ADP Pullback Draws Buyers

By David Russell, reporter at OptionMonster

NEW YORK -- Automatic Data Processing (ADP) pulled back Thursday, and the bulls stepped in.

OptionMonster's tracking systems detected the purchase of about 3,200 April 62.50 calls for 35 cents. Volume was more than 23 times the strike's open interest before the session began, indicating that new money was put to work in the trade.

These calls lock in the price where investors can buy shares, giving them the potential to generate some nice leverage in the event of a rally. But if the stock stays below the $62.50 strike price, they will expire worthless.

ADP fell 1.54% to $60.27 Thursday. The slow-moving payroll stock has been grinding higher for the last 2-1/2 years, recently touching its best level since late 2000.

Total option volume was five times greater than average in the company Thursday, with calls accounting for a bullish 80% of the total.

Russell has no positions in ADP.

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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