Stocks quoted in this article:
Call volume was heavy on EMC Corporation (NYSE:EMC) on Wednesday, with roughly 25,000 contracts crossing the tape -- more than doubling the stock's daily average of about 10,000 calls. Taking a closer look, one speculator initiated a long call spread on EMC, betting on the stock to turn in a bullish performance through the end of 2014.
Specifically, the trader bought to open several big blocks of January 2015 27-strike calls, and simultaneously sold to open an equivalent number of January 2015 31-strike calls. This bullish debit spread will attain its maximum profitability if EMC closes at or above $31 per share upon January expiration -- roughly 19% north of the equity's current perch at $26.08.
That's an ambitious forecast for EMC, which hasn't touched $31 since January 2001. In fact, since early 2011, shares of EMC Corporation (NYSE:EMC) have consistently stalled out in the $27-$30 region. However, Wall Street still has high hopes for the stock; 21 out of 25 analysts have handed out a "buy" or better rating, with an average 12-month price target of $30.07.