Bulls Go Bottom-Fishing in Dell
Investors are trying to call a bottom in Dell.
For the second time in a week, OptionMonster's tracking programs detected unusual call volume in the beaten-down computer maker. Yesterday activity focused on the January 2015 12 calls, with a block of 6,500 contracts purchased for $1.02.
The investor has now locked in an entry price on Dell for the next 14 months. The long calls stand to generate big profits if the stock rallies, but the options will also become worthless if it doesn't move.
Shares of Dell rose after the calls hit in yesterday's session, ending the day up 2.94 percent to $9.45. The stock is now attempting to bounce at its lowest level since March 2009.
On Nov. 2, traders bought the February 10s for $0.36. Those contracts have now inflated to $0.44, which shows the kind of leverage that can be generated with options.
More than 35,000 contracts traded in the name yesterday, triple its daily average. Calls outnumbered puts by more than 2 to 1, and the puts that traded were mostly sold. That reflects a willingness to own shares not far below their current levels, another bullish sign.
—By CNBC Contributor David Russell
Options Trading School:
David Russell is a reporter and writer for OptionMonster. Russell has no positions in DELL.