Traders Bet US Airways Will Take Off
If option traders are right, U.S. Airways may be preparing to roll down the runway and fly higher.
OptionMonster's tracking systems showed heavy activity in the January 15 calls yesterday, plus the February 16 calls. The big trades were selling in the January 15 calls for $0.63 and buying in the February 16s for $0.85.
Calls lock in the price investors must pay to buy shares, so they can generate significant leverage when their underlying stock moves. But these options also lose value as expiration approaches, so yesterday's trader rolled a January position forward by a month to avoid that time decay.
The trader paid about $0.22 and now has an additional month of upside exposure in the airline. U.S. Airways shares fell 0.2 percent to close at $15.13 yesterday, but earlier in the session it climbed to $15.50 — its highest price in almost five years.
More than 57,000 contracts traded in the session, about six times more than average. Calls outpaced puts by 48,000 to about 9,000, which further reflects the session's bullish sentiment.
—By CNBC Contributor Pete Najarian
Additional News: US Airways Said December Revenue Rose 4%
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC's "Fast Money" and co-founder of OptionMonster.com. Najarian owns LCC calls.