Trinity Industries, Inc. (TRN) Speculators Count On a Rebound

One trader bought to open 4,000 weekly 4/24 34-strike calls on Trinity Industries Inc (NYSE:TRN)

by Alex Eppstein

Published on Apr 22, 2015 at 1:40 PM

Trinity Industries Inc (NYSE:TRN) is getting hammered on reports the industrial company is being investigated by the Department of Justice. At last check, the shares were down 8% at $33.35. However, a number of short-term options traders are counting on a technical rebound by week's end.

Diving right in, TRN calls are crossing at six times the usual intraday rate, and more than double the pace of puts. Buy-to-open activity is detected at the weekly 4/24 34-strike call, as speculators -- including one buyer who initiated a 4,000-contract sweep -- are confident the stock will muscle back above $34 by Friday's close, when the weekly options expire.

For the past few months, TRN calls have been bought to open over puts at an accelerated clip. The equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.02 outranks 72% of comparable readings from the past year.

Analysts are also extremely bullish on TRN. Nine of 10 brokerage firms consider the shares a "buy" or better. Plus, the equity's average 12-month price target of $40.80 stands at a 22.3% premium to the current perch.

On the charts, Trinity Industries Inc (NYSE:TRN) has been a beast in 2015, adding more than 19%. However, if the stock extends its losses beyond today, an unwinding of optimism on the Street could result in headwinds.

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