NEW YORK -- Leggett & Platt ( LEG) has been running on the heels of strong results, and the bullish option traders are piling in.
OptionMonster's Heat Seeker program detected the purchase of almost 2,200 November 40 calls Tuesday, most of which priced for $1.15. Volume was almost eight 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 investors can buy stock in the company, whose metal products are used in furniture, automobiles, and aircraft. That way they can profit from a rally while jeopardizing only the cost of the options.
Leggett rose 1.15% to $41.30 on Tuesday and is up 22% in the last month. Earnings and revenue both beat expectations on Oct. 22, prompting management to raise the lower end of its guidance.
Overall option volume in the name was 11 times greater than average Tuesday, with calls accounting for a bullish 78% of the total.-- Written by David Russell of OptionMonster
Russell has no positions in LEG.