Traders turn bullish on US Silica
U.S. Silica Holdings does not typically see much option activity, but yesterday option traders turned bullish on the name.
OptionMonster's tracking systems identified buying in the October 22.50 calls, where 2,561 contracts traded for $1.35 to $1.75. Open interest in the strike was just 504 calls before the session began, indicating that new positions were established.
The volume wasn't huge, but it did stand out in a name that averages just 938 options a day. Total Silica calls outnumbered puts by 4 to 1 yesterday, reflecting the bullish sentiment.
The calls purchased yesterday lock in the price where traders can buy the stock through mid-October, no matter how far it might rise. But these contracts will track the share price closely because they are in the money, and they will quickly lose value if the stock doesn't move soon.
The company mines and sells commercial silica that has a broad range of uses, from oil and gas fracking to the production of paints and plastics. Silica gapped lower after missing second-quarter estimates on July 31, but reaffirmed its full-year guidance. Shares have been range-bound since then but rose 4.05 percent yesterday to close at $22.89.
—By CNBC Contributor Mike Yamamoto
Additional Views: Forget growth vs. dividend—buy both
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Mike Yamamoto is managing editor for OptionMonster. Yamamoto has no positions in SLCA.