NEW YORK -- IAC/InterActive (IACI) bucked the market's downturn on Tuesday, and the bulls are looking for a breakout.
OptionMonster's Heat Seeker system showed that traders purchased 4,000 October 70 for $6.60 to $6.73 and 1,250 July 80 calls for 80 cents to $1. Volume surpassed open interest at both strikes, which means that new money was put to work.
Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.
IAC/InterActive rose 2.2% to $73.30 on Tuesday, closing just below its 52-week high of $73.93 reached in early September. The media and Internet company beat consensus estimates on the top and bottom lines last week, citing higher paid subscriptions on its dating Web sites.
Tuesday's overall option volume was 14 times greater than average in the session, with calls accounting for a bullish 90% of the total.
-- Written by Mike Yamamoto of OptionMonsterYamamoto has no positions in the stocks mentioned.