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Why Are Traders Long-Term Bulls on Crown Holdings?

Traders are making a long-term bullish bet on Crown Holdings after the packaging products company gapped higher on its earnings release last week.

Crown closed yesterday down 0.78 percent to $25.44. The shares had plummeted on Jan. 22 after closing below their 50-day moving average but gapped back up last Tuesday on the strength of fourth-quarter earnings.

Yesterday's option activity was concentrated at the January 2011 22.50 contracts, where some 3,500 calls were bought in a span of seven minutes yesterday morning, according to OptionMonster's tracking systems. The volume, which included one block of 2,500 bought for $4.90, dwarfed the open interest of just 163 contracts at the strike.

The stock would need to gain at least 7.7 percent for those calls to turn a profit. Overall calls in the name outnumbered puts by nearly 24 to 1.

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Crown Competes With:

Ball Corporation

Silgan Holdings

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Options Trading School:

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Mike Yamamoto is an analyst and writer for OptionMonster.

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