Traders are making long-term bullish bets on Discover Financial Services ahead of its earnings report next week.
About 1,700 January 75 calls have been purchased for $0.50 and $0.55 this morning, according to optionMONSTER’s Heat Seeker system tracking system. Open interest in the strike was just 4 contracts before the trades appeared, so this is clearly fresh buying.
These long calls lock in the price where the stock can be purchased through mid-January no matter how far it might climb. They could be sold earlier at a profit if premiums rise with a rally before then, providing potentially significant leverage, but the contracts will expire worthless if shares remain below $75.
— Option Monster