Traders Buying Discover Financial Calls

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InvestorPlace
Call option buyers have discovered credit card issuer and processor Discover Financial Services (NYSE: DFS ). The stock attracted bullish options trading activity yesterday for the second time in three sessions. More than 5,100 DFS July 21 Calls changed hands against open interest of just 172 contracts, clearly indicating that these were new positions. Most of the calls traded with a strong buying bias at or near the ask price, ranging from $3.45 to $3.60, according to optionMONSTER’s Heat Seeker system. On Tuesday, traders bought 2,500 DFS April 24 Calls for $0.40 and $0.45 in late-afternoon trading yesterday. The open interest at the strike was just 668 contracts, indicating that this is a new position. DFS closed yesterday at $23.95, down 1.16% on the day. DFS is trading just pennies below its 15-day moving average, which has been serving as resistance for the last week. Although the shares have slipped from their 52-week peak of $24.99 on March 30, the stock is still trading at its highest levels since August 2007. The in-the-money calls purchased yesterday will turn a profit if DFS gains roughly 2.5% before the contracts expire in mid-July. The company’s next earnings report is scheduled for June 20. Overall calls at all strikes in DFS outnumber puts by more than 19 to 1. optionMONSTER ® provides stock market insight, option trade ideas, and options education to meet the needs of do-it-yourself investors.