By David Russell of OptionMonster
NEW YORK -- A large trader is betting that Monsanto (MON) will keep climbing into the summer.
More than 12,000 July 120 calls were purchased in the agriculture giant on Friday, most of which priced for $2.84, according to OptionMonster's tracking programs. Volume was almost triple the previous open interest in the strike, indicating that new money was put to work.
Long calls lock in the price where a stock can be bought, letting investors cheaply position for a rally without necessarily buying shares. These options can also generate tremendous leverage because of their low initial cost, but they can expire worthless if the stock stalls or pulls back.
Monsanto's shares fell 0.63% to $113.28 on Friday but are up 7% since its options lit up our scanners in late January. The calls cited at that time -- the July 115s --h ave inflated by more than 60% from the same move. The company's next earnings report is scheduled for April 2.
Total option volume in the name was seven times greater than average in the session, with calls outnumbering puts by almost 9 to 1.
Russell has no positions in MON.