By David Russell of OptionMonster
NEW YORK -- Manitowoc (MTW) has pulled back to a key level, and the bulls are piling in.
OptionMonster's tracking systems detected the purchase of 7,600 June 30 calls Tuesday, most of which priced for 65 cents to 75 cents. Volume surpassed the strike's previous open interest of 5,223 contracts, which indicates that new positions were initiated.
Calls lock in the price where investors can buy a stock, letting them cheaply position for a move higher. That way they control the amount of capital at risk and enjoy potentially significant leverage in a rally, though the contracts could expire worthless if shares stall or decline.
Manitowoc fell 0.35% to $28.21 on Tuesday. The maker of cranes and commercial food equipment fell from above $33 last week after revenue missed expectations, but the stock is now trying to rebound around its 100-day moving average. It's also the same level where shares consolidated in early February.
Total option volume in Manitowoc Tuesday was quadruple its daily average for the last month. Overall calls outnumbered puts by almost 7 to 1, reflecting the session's bullish sentiment.
Russell has no positions in MTW.