Och-Ziff Draws Bullish Trades

Och-Ziff Capital Management

is not a name that often sees unusual option activity, but yesterday its trading lit up our screens.

OptionMonster’s tracking systems showed early buying in the September 7.50 calls, with about 5,000 purchased in the first 15 minutes of the session for $0.40. Volume was more than 6 six times the open interest in the strike at the beginning of the day, indicating that these were new positions.

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Those callslock in the price investors must pay to buy shares in the hedge-fund operator. They can generate some nice leverage in the event of a rally, but will expire worthless if the stock doesn’t move before they expire.

That leverage was already at play yesterday because Och-Ziff was up about 3 percent when the options hit. The stock continued marching higher throughout the session and ended up 12 percent at $7.94. Those calls, meanwhile, inflated 50 percent to $0.60.

Shares have been falling for a long time and were building support near their lowest level in more than three years. Then the stock rallied after earnings and revenue beat analyst estimates.

Overall option volume was 47 times greater than average in the session, with calls outnumbering putsby 8 to 1.

—By CNBC Contributor David Russell

Additional News: Och-Ziff Shares Surge After It Beats Earnings Estimates

Additional Views: Is the Auto Sector Heating Up?: Russell


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David Russellis a reporter and writer for OptionMonster . Russell has no positions in OZM.