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This Telecom Firm to See Prolonged Run: Trader

David Russell|writer, OptionMonster
Wednesday, 14 Apr 2010 | 7:46 AM ET

ADC Telecommunications is breaking out, and the bulls are looking for a prolonged run.

OptionMonster's tracking systemsdetected unusual buying in the January 10 calls, which traded 7,080 times for $0.45 to $0.65. Volume was almost six times open interest in the strike.

The maker of broadband equipment rose 4.99 percent to $8.21 yesterday and is up 14 percent in the last month. The stock gapped higher after issuing better-than-expected earnings on Feb. 9. (It's also been favorably mentioned by Jim Cramer.)

ADC spent most of March consolidating between $7 and $7.50 and then started rallying despite bearish options activity late last month.

Yesterday's call buyers are looking for shares to rally past $10 by January expiration and may be hoping for the stock to fill a bearish price gap that occurred on July 23, 2008. Traders may also expect the company to announce positive earnings results after the bell on May 5.

Overall option volume in the name was 20 times greater than average in the session, and calls accounted for 96 percent of the activity.

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ADCT Competes With:

CommScope

Corning

Tyco International

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Options Trading School:

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David Russell is a reporter and writer for OptionMonster.

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Disclaimer

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