Call Buyers Dial Up Ericsson

By David Russell of OptionMonster


NEW YORK -- Ericsson (ERIC) hasn't seen much unusual option activity in recent years, but Thursday the Swedish name drew heavily bullish trades. 

OptionMonster's tracking programs detected the purchase of about 6,900 January 14 calls for 30 cents and 35 cents. Volume was more than 30 times the previous open interest in the strike, which indicates that new money was put to work. 

These long calls lock in the price where a stock can be bought, letting investors position for a rally at limited cost. They can generate significant leverage if shares move in the right direction but can also lose value on a selloff. 

Ericsson rose 1.45% to $12.62 on Thursday. The Stockholm-based telecom-equipment company gapped higher following its last quarterly report in July, pulled back, and then bounced at its 50-day moving average. Thursday's call buyers are looking for more gains heading into early next year and are targeting the same $14 area where the stock peaked last September. 

Overall option volume in the name was 28 times greater than average in the session, with calls accounting for a bullish 96% of the total. 

Russell has no positions in ERIC.

 

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.

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