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Option Bulls Are Dialing for Gains in China Unicom

China Unicom

AP

almost never shows up on OptionMonster’s screening systems, but yesterday the name lit up early with bullish activity.

Traders focused on the October 15 calls, with buyers paying $0.95 and $1. More than 2,100 of those contracts traded against open interest of just 198, indicating that new money was at work in the trade.

China Unicom

Callslock in the price investors must pay to buy the stock, so they can generate significant leverage if the stock rallies. But if it doesn’t, they will be worthless when they expire in mid-October.

China Unicom popped 3.17 percent yesterday to close at $13.98 after the company announced that it would buy back a 4.56 percent stake owned by Spanish carrier Telefonica. The company provides GSM and WCDMA cellular services in China. With some 159 million customers as of Dec. 31, it is much smaller than rival China Mobile, but still massive.

Total option volume in China Unicom was seven times greater than average. Calls outnumbered putsby more than 500 to 1 in the session.

—By CNBC Contributor Pete Najarian

Additional News: China Mobile in Talks With Apple for iPhone

Additional Views: China Mobile a Buy, Not China Unicom: Pro

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Options Trading School:

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Pete Najarianis a professional investor, CNBC contributor, regular co-host of CNBC’s “ Fast Money ” and co-founder of OptionMonster.com . Najarian has no positions in China Unicom.

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