CBS Bulls Poised for Big Gains

By David Russell, reporter at OptionMonster

NEW YORK -- CBS ( CBS) has been extremely active recently, and the bulls came back Wednesday.

OptionMonster's tracking systems detected the purchase of more than 11,000 March 42 calls, most of which priced for 50 cents. Volume was more than 12 times the strike's open interest at the start of the session, indicating that this is fresh buying.

Calls lock in the price where investors can buy shares, so they can generate nice leverage in the event of a rally.

And that's exactly what it looks like will happen, because the broadcaster made a big announcement after Wednesday's close. CBS plans to separate its billboard businesses, forming a real-estate investment trust for its U.S. properties and selling its overseas properties.

CBS, which fell 0.42% to close the regular session at $37.94, shot up to $40.94 in after-hours trading. Those March calls will likely double this morning if the gains hold.

There was also bullish call buying on Wednesday and Thursday of last week, and those investors are now looking at gains of at least 100% after the billboard news.

Total option volume was quadruple the daily average in CBS Wednesday, with calls outnumbering puts by a bullish 7-to-1 ratio.

Russell has no positions in CBS.
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.

If you liked this article you might like

Comcast Dodges Big Social, Moves Watchable In-House

Rolling Stone Stake Could Fetch as Much as $80 Million

Hulu Threatens Landmark Networks With Prestigious Emmy Win

Weekend Box Office: 'Mother!' Flops With F Rating, 'It' Smashes Records

Why Entercom Communications Is a Buy: Cramer's Top Takeaways