Expect This Equipment Rental Company to Rally Higher
Investors are betting that United Rentals will rally more after breaking to a six-month high last week.
OptionMonster's tracking systemsdetected heavy buying of the September 7.50 calls, which traded 3,717 times for $0.50 to $0.90. Volume was five times existing open interest.
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United Rentals rose 4.92 percent to $7.47 on Friday. After the bell Wednesday, the rental company raised its forecast for 2009 free cash flow to $325 million from $300 million after slashing purchases of new equipment. The news pushed the shares above $7, which had been a technical resistance area, to their highest levels since January.
United Rentals needs to climb at least 7 percent by expiration for the calls purchased Friday to turn a profit. Other investors purchased the September 10 calls for $0.10 to $0.15, betting on a sharper move to the upside. Volume in the strike was more than nine times open interest.
Overall options activity was almost 35 times above average, with calls outnumbering puts by 16 to 1.
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David Russell is a reporter and writer for OptionMonster.