Bulls Target CIT Ahead of Earnings

By David Russell of OptionMonster
 
 
(CIT) CIT releases earnings next week, and the bulls piled in Tuesday.
 
OptionMonster's tracking systems detected heavy buying in the February 52.50 calls. The largest block of 4,500 contracts went for 42 cents, accounting for more than half the 8,250 that were purchased. Volume was 98 times previous open interest, so new money was clearly put to work.
 
These calls lock in the price where shares can be purchased in the small-business lender. They provide cheap exposure to gains and can let investors generate significant leverage in a rally, but the contracts will expire worthless if shares remain below $52.50 through mid-February.
 
CIT shares declined 0.52% to $49.64 Tuesday, pulling back to their 100-day moving average for the first time in more than a month. Quarterly results come out on Jan. 28, and Tuesday's traders now stand to profit from the stock gapping higher on a strong report.
 
Total option volume was 13 times greater than average in the session, with calls outnumbering puts by a bullish 16-to-1 ratio.
 
Russell has no positions in CIT.

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

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Crash-Proof Portfolio

Let the Najarian Brothers Crash-Proof Portfolio

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

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

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

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

Is General Electric Stock Still Good for Your Retirement Account?

Is General Electric Stock Still Good for Your Retirement Account?