Owning calls locks in the price where investors can buy the stock, so they rise when shares go higher. The October 29 calls had already performed well, so yesterday’s trader is closing that position before it expires at the end of next week and is repositioning them in the November contracts in hopes of further gains, collecting a credit of about $1.82 in the process.
Shares of Lowe’s fell 0.69 percent to $31.55 yesterday. The shares have trailed those of larger rival Home Depot but have a very similar trading pattern, and yesterday R.W. Baird raised its price target for HD.
Calls outpaced puts in Lowe’s by 24,000 to about 1,900. Total option volume was more than 5 times greater than average.
—By CNBC Contributor Pete Najarian
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Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com. Najarian has no positions in LOW.