By David Russell of OptionMonster
NEW YORK -- Pitney Bowes (PBI) has broken a long-term resistance, and option traders are betting that it will keep ripping higher.
OptionMonster's tracking programs detected the purchase of 5,000 January 30 calls for $1.80 and the sale of 5,000 January 25 calls for $3.80 on Friday. Volume was below open interest at the lower strike, which suggests that a long position was closed and rolled to the higher strike.
Long calls lock in the price where a stock can be bought, letting investors cheaply position for gains while limiting the amount of capital at risk. They can also generate significant leverage if a rally ensues. Rolling to the January 30s allows the trader to receive a credit of $2 while keeping him exposed to further gains.
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Pitney Bowes' shares fell 0.22% to $26.98 on Friday and are pushing above their previous highs from 2010 and 2011. Traditionally a maker of snail-mail postage meters, the company has been reinventing itself as a provider of communications products and services. The stock has more than doubled since bottoming near $10 early last year.
Overall option volume was eight times greater than average in the session, with calls accounting for a bullish three-quarters of the total.
Russell has no positions in PBI.