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Joy Global Options Heat Up as Stock Advances

JOY has seen a spike in both call and put speculation

by 7/5/2012 2:00 PM
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The shares of Joy Global Inc. (NYSE:JOY - 58.30) have muscled higher along with fellow coal-mining-related stocks today, sparking a flurry of options activity -- especially on the call side of the tape. In early afternoon trading, JOY has seen over 8,100 calls change hands -- more than twice its average intraday call volume. Meanwhile, more than 3,700 JOY puts have changed hands, marking a 59% increase to the equity's normal put activity.

Most popular on the call side is the out-of-the-money August 60 strike, which has seen more than 1,200 contracts traded on open interest of fewer than 1,200, suggesting new positions are being added. Plus, a healthy portion of the round-number calls traded at the ask price, hinting at buyer-driven volume. By purchasing the August 60 calls to open, the traders are expecting JOY to surmount the $60 level within the next several weeks.

Over on the put side, speculators are taking a more aggressive stance. Most popular has been the weekly 55-strike put, which has seen more than 1,900 contracts traded on open interest of fewer than 1,400 -- again, pointing to fresh initiations. Plus, 92% of the puts have crossed at the ask price. By purchasing the puts to open, the buyers are betting on JOY to retreat beneath the $55 level by tomorrow's closing bell, when the weekly options expire.

Among short-term options players, calls are the contracts of choice, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.75. What's more, this ratio stands just 11 percentage points from a 52-week low, suggesting near-term options traders have rarely been more call-heavy during the past year.

In the same vein, analysts are already in JOY's bullish camp, too. Currently, the stock boasts nine "strong buys" and three "buy" ratings, compared to five lukewarm "holds" and not a single "sell" or worse suggestion.

Technically speaking, the adoration on Wall Street seems somewhat at odds with JOY's performance on the charts, with the stock down almost 40% since skimming the $96 level in early February. In today's session, the shares have tacked on 3.7% to linger in the $58.30 region, but are still staring up at their 10-week moving average, which hasn't been toppled on a weekly closing basis in more than four months.


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