FSIN – Fushi Copperweld, Inc. – The manufacturer of electrical components and equipment popped up on our ‘hot by options volume’ market scanner in the first half of the trading day after a large chunk of calls changed hands in the March 2011 contract. Fushi Copperweld’s shares rallied 3.3% during the session to secure an intraday high of $8.10 as of 12:35 pm ET. It looks like one investor purchased 20,000 calls at the March 2011 $10 strike at a premium of $0.65 apiece. Perhaps the call buyer is expecting Fushi’s shares to increase significantly ahead of expiration day in March. In this scenario, the investor stands ready to amass profits should shares surge 31.5% in the next six months to exceed the effective breakeven price of $10.65 by March expiration. FSIN’s shares last traded above $10.65 back on June 3, 2010. Approximately 20,310 options changed hands on Fushi today, which is nearly double the number of lots of previously existing open interest on the stock of 11,112 contracts. FSIN’s overall reading of options implied volatility dropped 11.3% to 41.62% by 12:45 pm ET.
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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.
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