CNBC Stock Blog

Bulls Fill Their Carts With Dollar General

David Russell | Writer, OptionMonster
Key Points



Traders were filling their carts at Dollar General yesterday, looking for the discount retailer to rally.

OptionMonster's Depth Charge tracking system detected a surge of call buying in the stock, which has been working its way higher since the middle of last month. Early activity focused on the December 52.50 calls as buyers paid 50 cents. Premiums then rose and larger blocks followed for 60 cents to 80 cents.

The December 50 calls also saw a heavy buying, including a block of 20,000 contracts that went for $1.50. Volume was more than nine times the open interest in each strike at the start of the day, clearly indicating new activity.

Those calls lock in the price where investors can buy shares. These options can generate leverage in the event of a rally, but will lose all their value if the stock doesn't rise.

Dollar General shares gained 0.56 percent yesterday to close at $49.86. It hit an all-time high above $56 in July but has been pulling back since. The stock has been holding support at its 200-day moving average in the last two months, which could be leading some investors to believe that it's still trending higher.

Total option volume was 72 times greater than average in the name, with calls accounting for a bullish 96 percent of the activity.

—Written by CNBC Contributor David Russell

Additional News: Why Dollar General Is a Steal: Jim Cramer

Additional Views: Options Action: Dollar General Ahead of Earnings


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David Russell is a reporter and writer for OptionMonster. Russell has no positions in DG.