More than 4,400 November 22 calls were purchased Monday, mostly for $1.40, according to OptionMonster's tracking systems. The volume was well above the strike's previous open interest of 2,340 contracts, indicating that this is fresh buying.
These long calls lock in the price where the stock can be purchased through mid-November no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will lose value if shares stall or pull back.
The bullish option activity was cited by OptionMonster co-founder Pete Najarian on CNBC's "Fast Money" program last night. The action followed buying in the February 22 and February 24 calls on Aug. 6.
Steel Dynamics rose 3.62% to $22.91 on Monday and is up 23% in the last month. Other steel companies saw bullish call action as well Monday, including Nucor (NUE) and AK Steel (AKS) .
Total option volume in Steel Dynamics was six times greater than average in the session, with overall calls outnumbering puts by a bullish 16-to-1 ratio.
Yamamoto has no positions in any of the stocks mentioned; Najarian owns NUE calls.