AA – Alcoa, Inc. – Shares of the aluminum manufacturer are up 8.10% to stand at $12.01 as of 12:15 pm (ET). The rally in the price of the underlying stock inspired bullish call buying across several expiries. Near-term optimists are positioning for continued upward momentum in Alcoa’s shares by purchasing at least 9,400 now in-the-money calls at the July $12 strike for an average premium of $0.41 apiece. Investors buying calls outright at the July $12 strike are prepared to profit if the aluminum maker’s shares gain another 3.33% to trade above the average breakeven price of $12.41 by July expiration day. Bulls also purchased approximately 6,600 calls at the higher July $13 strike for an average premium of $0.17 each. Alcoa’s shares must rally 9.65% from the current price of $12.01 before July $13 strike call buyers make money above the effective breakeven point at $13.17. Finally, the July $14 strike enticed options optimists to purchase roughly 1,000 calls for an average premium of $0.05 each. Call buying behavior spread to the October $14 strike where some 5,300 calls were picked up for an average premium of $0.39 per contract. Investors long the calls make money only if Alcoa’s shares surge 19.8% to trade above the average breakeven price of $14.39 ahead of October expiration.
Affiliation: Interactive Brokers
Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.
Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.
Visit: Interactive Brokers