Call Buyers Continue to Target Patriot Coal Corporation

Patriot Coal Corporation (PCX) was targeted by heavy call volume yesterday. During the course of the session, traders on the International Securities Exchange (ISE) bought to open 3,584 calls on PCX, compared to just 1 put.

The August 7.50 call attracted a large block trade, with 3,386 contracts changing hands between the bid and ask prices at 2:43 p.m. Implied volatility rose following the transaction, suggesting that these contracts were among those bought to open.

Open interest at this strike now totals 5,646 contracts, establishing the 7.50 call as the most popular option in the August series. In the front-month July series, call players have dividend their attention between the 10 strike, with 5,250 open positions, and the 7.50 strike, which carries open interest of 5,058 contracts.

This bullish buying activity suggests that some traders are keeping the faith on PCX, despite its recent rejection at the $10 level. The equity has tumbled sharply during the past two weeks, though it's clinging narrowly to support at its 10-week moving average.

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