Nearly 28,000 Jan. 2010 15 calls changed hands yesterday, vs. open interest of 45,000 contracts. During trading yesterday morning, an investor bought 25,000 of these options for 98 cents per contract, meaning the investor needs AA shares to expire higher than $25.98 at the beginning of next year to make money. Implied volatility for these calls is 58.1, according to ONN.tv's "Sidewinder" report.
On Tuesday, when the investor started buying these calls, the open interest of the Jan. 15 calls was 25,000 contracts. We saw more than 21,000 Jan. 15 calls trade with a volume-weighted average price of approximately $1.15. Investors who bought these calls need AA stock to expire higher than $16.15.
Current open interest in the Jan. 15 calls is 68,000 contracts. Open interest on these calls almost doubled from Tuesday to Wednesday and skyrocketed for a third straight day, suggesting increased bullishness in AA. The stock has rallied more than 130% since reaching a 52-week low of $5.26 on March 6, but these shares remain 62% off their 52-week high of $32.40. Shares were recently trading at $12.39.
The heavy call-buying that we've seen over the last few days does not mean investors should run out and buy AA shares. But it is notable that some bullish investors are betting on more upside in AA over the next five months.
