Construction giant Fluor (FLR) is up 16 percent over the past year, slightly lagging the overall stock market. One trader sees shares rallying in the coming weeks.
That’s based on the February 16, 2024 $40 calls. With 39 days until expiration, 10,429 contracts traded compared to a prior open interest of 170, for a 61-fold rise in volume on the trade. The buyer of the calls paid $0.54 to make the bullish bet.
Fluor recently traded for about $36.50, so the stock would need to rise about $3.50, or just under 10 percent in a little over a month for the option to move in-the-money.
That strike price is also right near the stock’s 52-week high of $40.76.
Shares have been rallying, but have sold off sharply in recent sessions, so a call option play like this is a good way to bet on a rebound from the current selloff in the weeks ahead.
Operationally, Fluor has been faring well, with revenues up 10 percent over the last year and earnings up 836 percent.
Action to take: Investors may like shares here, as they’re getting oversold in the short-term and could see a low-double-digit return higher in the weeks ahead. At present, Flour does not pay a dividend.
For traders, the February calls are well positioned for a rebound, and on a strong move could see high double-digit returns or better.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any companies mentioned in this article.