Bulls Want Money From Paychex

By David Russell of OptionMonster

NEW YORK -- Paychex (PAYX) manages paychecks for millions of workers, and now the bulls want their cut.

OptionMonster's tracking systems detected the purchase of 8,800 January 2016 50 calls for $1.30 Thursday. Volume was more than 290 times the previous open interest in the strike, which indicates that new positions were initiated.

Long calls lock in the price where a stock can be bought, letting investors benefit from a rally while risking much less cash than would be necessary to own shares. Their low cost can also result in tremendous leverage if the stock does move higher.

Paychex shares rose 0.82% to $42.92 Thursday. The stock rallied on a strong earnings report in December, stalled early this year, and skidded down to its 200-day moving average. The stock has been working its way back in the last two months as an improving labor market helps its business environment. Earnings will be released next Wednesday, March 26.

Overall option volume was more than 12 times greater than average in the session, with calls accounting for a bullish 84% of the total.

Russell has no positions in PAYX.

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

Stocks Eclipsed by Nothing: Cramer's 'Mad Money' Recap (Monday 8/21/17)

Jim Cramer -- It's Time to Get to the Bottom of ADP

Chipotle-Loving Bill Ackman Locked and Loaded to Torch ADP

Five S&P 500 Boards Have No Women as Gender Balance Growth Stalls

Mixed Signals Perplex Markets: Cramer's 'Mad Money' Recap (Friday 6/23/17)