OptionMonster’s tracking systems show that calls with a $25 strike price were active in all months trading, with heavy buying in contracts that expire tomorrow, next Friday, and in May. The weeklies traded for $0.13 to $0.17, while the standard April 25 calls fetched $0.25 to $0.40. The May 25s ended the session at $0.93.
Those calls lock in $25 as the entry price for the stock, so they can deliver major leverage compared to the share price. If the stock keeps rallying they could easily double, triple, or more. But if it drops even a little, those options will end up worthless.
Hewlett-Packard shares started strong yesterday and closed at $25.10, up 7.22 percent. The stock came into the session as the weakest member of the Dow Jones Industrial Average on the year.
—Najarian owns HPQ shares.
Additional News: Carly Fiorina on Hewlett-Packard’s Reorganization
Additional Views: Hewlett-Packard a Long-Term Play: Pete Najarian
Options Trading School:
Pete Najarian is a professional investor, CNBC contributor, regular co-host of CNBC’s “Fast Money” and co-founder of OptionMonster.com.