Bulls Put Stamp on Pitney Bowes

By David Russell of OptionMonster

NEW YORK -- Pitney Bowes (PBI) has broken a long-term resistance, and option traders are betting that it will keep ripping higher.

OptionMonster's tracking programs detected the purchase of 5,000 January 30 calls for $1.80 and the sale of 5,000 January 25 calls for $3.80 on Friday. Volume was below open interest at the lower strike, which suggests that a long position was closed and rolled to the higher strike.

Long calls lock in the price where a stock can be bought, letting investors cheaply position for gains while limiting the amount of capital at risk. They can also generate significant leverage if a rally ensues. Rolling to the January 30s allows the trader to receive a credit of $2 while keeping him exposed to further gains.

Pitney Bowes' shares fell 0.22% to $26.98 on Friday and are pushing above their previous highs from 2010 and 2011. Traditionally a maker of snail-mail postage meters, the company has been reinventing itself as a provider of communications products and services. The stock has more than doubled since bottoming near $10 early last year.

Overall option volume was eight times greater than average in the session, with calls accounting for a bullish three-quarters of the total.

Russell has no positions in PBI.

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

The Pitney Bowes Transformation: Cramer's Top Takeaways

How Long Can This Rally Run?: Cramer's 'Mad Money' Recap (Monday 9/19/17)

Heaven Knows, I Like Pitney Bowes

Stocks Are Fighting Back: Cramer's 'Mad Money' Recap (Wednesday 8/9/17)

Southwest Airlines, Alibaba, Procter & Gamble, Clorox: 'Mad Money' Lightning Round