Nearly 12,000 October 30 calls traded in a heavy buying pattern on Friday as premiums rose from 70 cents to $1, according to OptionMonster's tracking systems. These are clearly new positions, as open interest in the strike was just 190 contracts at the beginning of the session.
These long calls lock in the price where the stock can be purchased through mid-October 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 expire worthless if shares remain below $30.
Manitowoc gapped down from that $30 level after its earnings report on July 30 but held support at its 200-day moving average around $26 and has been drifting higher since. The calls bought on Friday are looking for the stock to fill that gap and reclaim its 50-day moving average, where it traded before the recent fall.Shares gained 3.19% on Friday to close at $29.42. OptionMonster co-founder Jon "DRJ" Najarian cited the name on CNBC's "Halftime Report" on Friday. Total option volume in Manitowoc reached 16,500 contracts, compared to a daily average of just 855 for the last month. Overall calls outnumbered puts by a highly bullish 23-to-1 ratio. Najarian is long MTW; Yamamoto has no positions in the name.