NEW YORK -- It didn't take traders long to make fast money in United Technologies (UTX) on Thursday.
OptionMonster's Heat Seeker system detected activity in the Weekly 111 calls expiring Friday, with about 2,900 bought for 22 cents to 40 cents in the first hour of Thursday's session. The stock pushed higher into the afternoon, and those calls roughly doubled to 70 cents. More than 7,800 traded by the end of the day in volume that far exceeded the previous open interest of just 625 contracts.
The quick gain resulted from the fact that such long calls cheaply lock in the purchase price on a stock. Investors use them to position for a rally with limited risk and stand to enjoy significant leverage if shares move higher.
UTX closed Thursday up 0.2% to $111.21. The aerospace-products manufacturer been parked under its 200-day moving average after rallying back from a 52-week low beneath $100. Profit also beat expectations the last time quarterly results were announced on Oct. 21.
Total option volume in the name was five times greater than average Thursday, with calls outnumbering puts by a bullish 13-to-1 ratio.
-- Written by David Russell of OptionMonster