Bulls Buy Into Tronox Ahead of Earnings

By Mike Yamamoto, managing editor of OptionMonster

NEW YORK -- Traders are turning bullish on Tronox ( TROX) before it reports earnings next week.

OptionMonster's tracking systems showed accelerated buying in the November 22.50 calls Wednesday as premiums climbed from $1.10 to $1.45. More than 2,900 contracts traded in volume above the strike's previous open interest of 2,329, indicating new activity.

Calls lock in the price where shares can be purchased no matter how far they might rise. Traders use them as a less expensive alternative to buying shares directly, getting the potential leverage provided by options while limiting the amount of money at risk if the stock heads south.

Tronox's stock rose 3.04% to $21.71 Wednesday, breaking above its 50-day moving average and returning to its highs of last week. The titanium producer will release second-quarter results after the close on Aug. 7.

Total option volume was 12 times greater than average in the session, with calls outnumbering puts by more than 6 to 1.

Yamamoto has no positions in TROX.

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.

More from Options

Rent-A-Center Bulls Quadruple Their Money

Rent-A-Center Bulls Quadruple Their Money

Let the Najarian Brothers Crash-Proof Your Portfolio

Let the Najarian Brothers Crash-Proof Your Portfolio

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Help You Generate Income With Options

All Investors Can Trade Options, Just Ask the Najarian Brothers WATCH VIDEO

All Investors Can Trade Options, Just Ask the Najarian Brothers WATCH VIDEO

Learn Options Trading from the Najarian Brothers, the Best in the Business

Learn Options Trading from the Najarian Brothers, the Best in the Business