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Bulls buy into Tronox before earnings

Mike Yamamoto | Managing Editor, OptionMonster
Thursday, 1 Aug 2013 | 5:22 AM ET
Nick M. Do | E+ | Getty Images

Traders are turning bullish on Tronox before it reports earnings next week.

OptionMonster's tracking systems showed accelerated buying in the November 22.50 calls yesterday as premiums climbed from $1.10 to $1.45. More than 2,900 contracts traded in volume above the strike's previous open interest of 2,329, indicating new activity.

Calls lock in the price where shares can be purchased no matter how far they might rise. Traders use them as a less expensive alternative to buying shares directly, getting the potential leverage provided by options while limiting the amount of money at risk if the stock heads south.

Equities looking more popular: pro
Mark Burgess, CIO of Threadneedle Investments, tells CNBC they are seeing clients putting money into equities.

Tronox rose 3.04 percent to $21.71 yesterday, breaking above its 50-day moving average and returning to its highs of last week. The titanium producer will release second-quarter results after the close next Wednesday, Aug. 7.

Total option volume was 12 times greater than average in the session, with calls outnumbering puts by more than 6 to 1.

—By CNBC Contributor Mike Yamamoto

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Disclosures:

Mike Yamamoto is managing editor at OptionMonster. Yamamoto has no positions in TROX.

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