NEW YORK -- Terex ( TEX) is trying to hold the lower end of its long-term range, and option traders apparently believe that it's ready to do some heavy lifting.
OptionMonster's tracking system detected the purchase of more than 6,000 April 32 calls, most of which priced for $1.65. Volume dwarfed previous open interest of just 63 contracts, which indicates that new money was put to work.
These long calls position for gains by locking in the price where investors can buy stock in the maker of cranes and construction equipment. Because they can lose only the cost of the options in a selloff, much less cash is at risk than in owning stock.
TEX rose 1.56% to $29.33 on Monday and is down from $45 in early March. Shares bounced last month around the same $26 level where they hit resistance in 2012 and found support the following June. That could make some chart watchers expect a rebound, despite weak guidance issued on Oct. 29.
Total option volume was seven times greater than average in the session, with overall calls outnumbering puts by 30 to 1.-- Written by David Russell of OptionMonster
Russell has no positions in TEX.