Unusual Options Activity: NCR Corp (NCR)

After trading in a range for nearly three months, shares of NCR Corp (NCR) have finally broken higher. One trader sees the trend continuing strongly in the next month.

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  • That’s based on the May $46 calls. With 39 days until expiration, over 8,060 contracts traded, a 40-fold rise in volume from the prior open interest of 204 contracts. With shares right around $39, shares would need to rally about 18 percent for the option to move in-the-money.

    The trader paid about $0.53 for the contracts on average.

    NCR used to be short for National Cash Register. While the company still has roots in transaction processing tools, the company has expanded its operations to teller machines, software programs, and other banking and retail financial services.

    While shares are up nearly double in the past year, the company still trades at about 15 times forward earnings.

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  • Action to take: With a technical breakout in shares, they’re likely to continue higher. That makes any out-of-the-money call option attractive. While the May $46 calls are a bit short on time for their strike price, the low cost of the option could deliver high double-digit returns in the coming weeks.

    Traders may like the option for a quick profit, but should definitely look to close the trade out on any decent move higher in shares.

     

    Disclosure: The author of this article has no position in the stock mentioned here, and has no intention of starting a position in the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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