NEW YORK -- Campbell Soup ( CPB) bounced off a key support level late last week, and option traders are looking for the upward momentum to continue in the short term.
More than 5,300 May 46 calls were purchased for 29 cents to 65 cents on Friday, according to OptionMonster's Heat Seeker tracking program. This represents fresh buying, as the volume was well above the strike's previous open interest of 1,029 contracts.
These long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. But the contracts can quickly lose value if the stock stalls or pulls back, and they will be worthless if shares are below $46 upon expiration at the end of next week.
Campbell rose 1.88% to $45.55 on Friday. Shares had been falling since hitting resistance near $47 in the first half of April but bounced right at their 200-day moving average on Thursday. The food company is scheduled to announce quarterly results on May 22, a week after Friday's long calls expire.
Total option volume in the name was eight times its daily average for the last month. Overall calls outnumbered puts by 53 to 1, reflecting the session's bullish sentiment.
-- Written by Mike Yamamoto of OptionMonsterYamamoto has no positions in the stocks mentioned.