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Options Traders Bullish on Alcoa Earnings

Tuesday, 7 Jul 2009 | 8:33 PM ET

I'll be the first to admit it: I am obsessed with the Jacko coveragetoday, not just on that crazy medium known as cable news, but across all major broadcast outlets. It's a spectacle of the highest order, and one with undeniable appeal (Brooke Shields & Al Sharpton together!!! You could put that on pay per view). But for those able to take their eyes off the lavish production, I promise you, there's a no less riveting development taking hold in the options pits today.

Case in point: Alcoacall options. Around 10:30 today, options traders began placing big bets that the stock will rise after earnings tomorrow. Specifically, they bought the Alcoa July 10-Strike calls, with nearly 50,000 contracts trading hands as of 3pm today.

Such bullishness in the face of earnings would be interesting alone, but what's truly fascinating here, compelling enough to drag this producer away from the Jackson funeral (which to me looks more like an award ceremony), is the timing of the buying.

The stock is up by about 3% today, but the rally didn't begin until about 1pm, right around the time Jacko's entourage was filing in the Staples Center. But the options buying started much earlier, around 10:30 according to Mike Khouw of Cantor Fitzgerald, (who despite his enormous fame as an "Options Action" trader, was not invited to the Jackson fracas).

"It looks to me the options market may have been leading the way," said Mike Khouw. "Basically they were buying out of the gate."

And clearly, they also weren't tuned into Jacko.

Questions, comments send them to us at: optionsaction@cnbc.com

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