Will This Construction Firm See a Breakout?
Shaw Group has been pushing against $36 since late February, and traders are looking for a breakout.
OptionMonster's tracking systemsdetected the purchase of about 2,000 May 38 calls, mostly for $0.60 to $0.70, and 1,150 May 37 calls for $1.10. Volume was more than 6 times open interest in both strikes.
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The construction company, which rose 1.34 percent to $36.25 yesterday, has spent almost two months consolidating at the same price level where it traded immediately before the 2008 market crash. The shares rallied about 17 percent in January and February despite a lack of clearly bullish news. The company, which is benefiting from government spending, reiterated full-year earnings guidance on April 7.
Some chart watchers may interpret the price action as evidence of a bullish trend and expect the shares to stage an extended rally if they break through their current resistance level.
The shares must climb at 5-6 percent by expiration for the options bought yesterday to turn a profit. The next scheduled event that could serve as a potential catalyst for the shares is an analyst and investor meeting April 29-30.
Overall options volume in the name was seven times greater than average in the session, with calls accounting for a bullish 90 percent of the activity.
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David Russell is a reporter and writer for OptionMonster.