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Will Taser Stun the Market?

By David Russell, reporter at OptionMonster

NEW YORK -- Stun-gun maker Taser International (TASR) has been trying to work its way higher, and Tuesday traders took a bullish shot on the name.

OptionMonster's scanning programs detected the purchase of 7,000 September 12.50 calls, most of which priced for 20 cents. Volume was about seven times open interest at the strike, indicating that new money was put to work.

Calls lock in the price where investors can buy shares in the company. These options can generate significant leverage in a rally because they are much less expensive than buying stock outright, but the contracts will expire worthless if the shares don't move far enough and fast enough.

Taser fell 0.52% to $7.70 Tuesday but is up 88% in the last year. It's recently been trying to make a higher low and remains above its rising 200-day moving average, which some chart watchers may consider a bullish pattern.

Total option volume was 22 times greater than average in the session, with calls outnumbering calls by more than 300 to 1.

Russell has no positions in TASR.

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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