Western Union is attracting heavy upside option activity ahead of its earnings report next week.
WU closed yesterday up a penny at $17.45. Shares have had faced resistance at the $20 level several times before plunging below $16 after the last earnings report in early February. Option traders apparently believe that the stock is ready to break through the $20 mark this summer, if not earlier.
OptionMonster's real-time systemsdetected 8,437 June 20 calls changing hands yesterday in a strong buying pattern for prices ranging from $0.10 to $0.25. The previous open interest at the strike was just 268 contracts, so this buying was clearly done to open new positions.
The volume was even higher at the August 20 strike, where 11,714 calls traded against open interest of 1,741 contracts. Most of those calls were bought for $0.35 to $0.50.
Western Union's stock would need to rise roughly 15 percent and 17 percent respectively for the June and August calls to turn a profit. Overall calls at all strikes outnumbered puts by 26 to 1.
The iconic money-transfer company is scheduled to announce its earnings results Tuesday morning before the market opens.
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Najarian owns WU long calls