Bulls Are Building in Home Depot

By Pete Najarian, co-founder of OptionMonster

NEW YORK -- Home Depot ( HD) has been running higher as the housing market heats up, and traders are looking for even more gains.

OptionMonster's trade scanners detected heavy volume in the January calls, with the 67.50s trading for 91 cents and the 70s fetching 33 cents. The trader may have been selling the lower-strike calls and buying new ones at the higher level.

Calls lock in the price where a stock can be bought, so they can generate some nice leverage in a rally. Winning positions in one contract can also be rolled into new calls, letting investors take profits while remaining exposed to further gains.

Home Depot's shares fell 0.14% to $64.98 on Monday. The home-improvement retailer's shares have soared more than 50% this year and are now back to levels not seen since early 2000.

Calls outnumbered puts by about 23,000 to 7,500 in the session, which shows how bullish sentiment was Monday.

Najarian has no positions in HD.
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.