Time Warner Pullback Draws Bulls

By David Russell of OptionMonster
 
NEW YORK -- Time Warner (TWX) has fallen sharply in recent weeks, but the bulls piled in Monday.
 
OptionMonster's tracking programs detected the purchase of 37,000 March 67.50 calls for 52 cents to 64 cents. Volume was more than 500 times the previous open interest in the strike, which indicates that new positions were initiated.
 
These calls lock in the price where investors can buy the stock, letting them cheaply position for potential gains. This way they limit the amount of capital at risk and can earn significant leverage if the stock rallies.
 
Time Warner's shares fell 0.69% to $62.88 on Monday and are back to their 200-day moving average for the first time since mid-2012. The stock has been pulling back since hitting resistance at the $70 level at the end of last year. Quarterly earnings come out on Feb. 5.
 
Overall option volume was 33 times greater than average in the session, with calls accounting for a bullish 97% of the total.
 
Russell has no positions in TWX.

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

Weekend Box Office Preview: Could 'Kingsman 2' Finally Dethrone 'It?'

Netflix Shares Could Rise 16% on Big Boost in Subscribers

How eSports Leaders Are Making a Business Out of the Professional Gaming Market

'The Handmaid's Tale' Emmy Win Is Really Big for Netflix

Cramer: Northrop-Orbital Deal Is Bigger Than Just the Synergies