Deere Bulls Bet on Happy Holidays

By Mike Yamamoto of OptionMonster

NEW YORK -- Deere (DE) has been falling for months, but traders are looking for a rebound by Christmas. 

More than 5,500 December 90 calls were purchased for 47 cents and 48 cents on Tuesday, according to OptionMonster's tracking systems. This is fresh buying, as open interest in the strike was just 1,502 contracts before the trades appeared. 

The long calls lock in the price where the stock can be purchased through mid-December no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $90. 

Deere shares fell 0.82% to close at $82.25 on Tuesday. The agricultural and construction equipment maker has been trending lower since its 52-week high of $94.89 reached in early May, but shares are now near levels that had held as support late last year. 

The company's next earnings report is scheduled for Nov. 26, a day before Thanksgiving and about 3-1/2 weeks before the December options expire. Tuesday's total option volume in the name was more than double its daily average for the last month. 

Yamamoto has no positions in DE.

 

 

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.

More from Options

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Crash-Proof Portfolio

Let the Najarian Brothers Crash-Proof Portfolio

Learn Options Trading from the Najarian Brothers, the Best in the Business

Learn Options Trading from the Najarian Brothers, the Best in the Business

All Investors Can Trade Options, Just Ask the Najarian Brothers WATCH VIDEO

All Investors Can Trade Options, Just Ask the Najarian Brothers WATCH VIDEO

Is General Electric Stock Still Good for Your Retirement Account?

Is General Electric Stock Still Good for Your Retirement Account?