Traders are staying bullish on ADT
Traders are betting ADT will rebound in coming weeks.
More than 3,800 February 34 calls were purchased for $0.65 to $1.10 this morning, according to optionMONSTER's Heat Seeker tracking program. Open interest in the strike was only 285 contracts before the trades appeared, showing that this is fresh buying.
These long calls lock in the price where the stock can be purchased for the next three weeks no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $34. (See our Education section)
The bullish trades follow buying in February 35 calls reported on our InsideOptions Pro subscription service Jan. 12 . The value of those contracts rose 33 percent in the next two weeks.
ADT is down 0.81 percent to $34.10 in midday trading but well off its session low of $32.90. The security-services company gapped higher after reporting quarterly results yesterday morning but then pulled back with the broader market. The stock is now at a support level that has held for the last two weeks.
Total option in the name tops 5,200 so far today, already more than triple its full-session average for the last month. Only 284 of those contracts are puts.
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